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Manufacturers Are Wary Over Push For Larger Substrates

One of the ways to cut chip costs is to transfer manufacturing to larger substrates. Is the LED-manufacturing industry in Taiwan ready for such a change? Richard Stevenson investigates.
LED performance improvements and price cuts have driven the significant growth of the LED industry over the last decade. However, according to Jed Dorsheimer - an analyst at investment bank Adam Harkness who covers the LED business extensively - the cost per lumen remains 10 times too high to penetrate the general lighting market. Dorsheimer thinks that significant reductions in the cost per lumen are possible, but only if manufacturers move to larger substrates, device performance improves and more partnerships are established between major international LED manufacturers, such as Nichia and Cree, and low-cost producers in Asia.

While Cree has already switched much of its LED output to a 3 inch SiC line, Honeywell, a supplier of sapphire substrates for GaN-based epitaxy, released 100 mm diameter substrates in the fall of 2004 to complement its 2 and 3 inch material. According to David Reid, Honeywell s product line manager for the sapphire group, larger substrates reduce production costs through more efficient use of gas, and decrease the overall substrate-handling time. And sapphire expenditure is important, explains Reid, because it is second only to ammonia when it comes to LED chip manufacturing costs.Bigger is betterReid thinks that 100 mm sapphire substrates will have the greatest appeal to manufacturers of high-brightness devices that use large die areas of typically 300 x 300 μm and 1 x 1 mm. Although the cost per square inch of the 100 mm sapphire substrates is currently higher than that of equivalent 3 inch material, he predicts that the price of his 100 mm products will soon fall. The firm s 100 mm substrates are already attracting some interest, with several LED manufacturers conducting trials to verify that their production line is suitable for larger wafers, Reid says.

He believes that LED manufacturers are now far more concerned with the quality of the substrate, because poor-quality wafers increase production costs through low device yields. Reid says that even small improvements are significant: a 5-10% yield increase translates into a 10-15% gain in revenue on an epiwafer and an equivalent drop in the cost per chip.

Honeywell evaluates its wafers by discussing with its customers the influence of its substrates on device performance. This is a time-consuming process because, according to Reid, the insularity of many manufacturers means that they are unwilling to divulge information as a group. Honeywell is therefore forced to consult each LED manufacturer individually. Reid believes that substrate specifications are increasingly reflecting customer needs, with a greater focus on the effect of warp and bow on LED performance.

A significant proportion of Honeywell s sapphire substrates are sold to LED makers in Taiwan, a region of the world that Dorsheimer highlights as being critical to reducing the LED cost per lumen. The company started shipping large numbers of wafers to Taiwan in 1998, and since then a collection of start-up firms have become high-volume manufacturers.

Although dramatic growth was seen up until 2004, additional expansion was put on hold following a recent slow down in activity. Despite the decline in growth of Taiwan s LED industry, and the saturation of lower-brightness LED production, Reid believes that Taiwanese manufacturers will still take an interest in Honeywell s 100 mm substrates. "They need to improve their product mix," he said, adding that some manufacturers in Taiwan are already moving toward production of the higher-brightness devices that he believes should benefit the most from larger substrates. However, Reid acknowledges that many manufacturers in Taiwan still use old reactors and 2 inch substrates.

Arima Optoelectronics is one such firm that uses 2 inch sapphire substrates for the majority of its LED production. The company produces ultrahigh-brightness InGaN and AlGaInP LED chips, as well as laser diodes, but does not package the devices. Its LED chips have contributed to a little more than half of the company s revenue, which rose from $67 million in 2003, to $85 million in 2004, and is projected to hit $100 million this year.

Arima president Pei-Jih Wang disagrees with Reid: "Right now I don t see any advantage for using the bigger sizes of sapphire." He believes that substrate manufacturers encouraging migration to larger substrates to mirror progress made in the silicon and GaAs industries fail to take into account the relative immaturity of the LED business. According to Wang, the vagaries of MOCVD dictate that the input of skilled engineers is essential to maintain consistent products. He also believes that improvements to wafer yields will be more important than increasing substrate sizes. In addition, he thinks that Taiwan s LED manufacturing industry is not set up for the 100 mm material, and that the expense of implementing these changes would not be compensated by any ensuing cost savings.

Wang is more interested in building relationships with major international high-brightness-LED makers, and believes that the low-cost manufacturing offered in Taiwan will be essential for the growth of global LED sales to continue. He says that although Osram has licensed its phosphor technology to several Taiwanese companies, he doesn t expect other major players, such as Nichia, Toyoda Gosei and Cree, to work with more than one or two companies at most, because of worries over illegal sharing of their technology.

If the cost per lumen of high-brightness LEDs falls significantly, everyone associated with the industry will benefit as the technology penetrates general lighting applications. As yet it is not clear how this will happen.

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