Technical Insight
The world's GaAs fabs face up to changing market conditions
Since the GaAs industry's halcyon days in 1999 and 2000, when all the talk was of new fabs and rapid growth, there has been a period of consolidation, retrenchment and closures. Tim Whitaker and Jon Newey spoke to several GaAs IC manufacturers around the globe about their current positions.
The GaAs IC manufacturing industry has undergone considerable change in the last few years. Vitesse, the first company to build and operate a 6 inch GaAs fab, recently announced that it would close the facility in Colorado Springs after failing to find a buyer or partner. Infineon, having sold its GaAs business to TriQuint, has stopped production at its 6 inch GaAs fab near Munich, Germany, after the processes were transferred to TriQuint s US GaAs fabs.
Nortel is closing down its GaAs HBT fab, while Skyworks, Filtronic and Agilent have all closed fabs in California. However, the news is not all bleak; Filtronic and Agilent are now concentrating their respective efforts at their 6 inch fabs in Newton Aycliffe, UK, and Fort Collins, CO.
Meanwhile, in North Carolina, RFMD has finally completed the conversion of its second HBT fab to 6 inch operation. Last month, the company announced the completion of the first major customer qualification of its 6 inch manufacturing capabilities. The move was precipitated by rising demand and the need to cut costs. "The conversion to 6 inch wafers will more than double the number of die per wafer without a significant increase in processing cost per wafer," said Curt Barratt, VP of wafer fab operations at RFMD. The company s first fab, which still handles 4 inch wafers, is now operating close to its maximum capacity of 60,000 wafers per year.
Changing plansWhile some companies went ahead with planned expansions by converting to 6 inch operation (e.g. Motorola and TriQuint) or expanding their existing facilities (e.g. Anadigics), others pulled back from their original strategies. NEC announced plans in 2001 to move to 6 inch manufacturing, but currently still has one GaAs IC fab in Otsu, Japan, processing 5 inch wafers. Raytheon, having evaluated a 6 inch conversion, chose to partner with WIN Semiconductor, a new Taiwanese GaAs foundry. Similarly, Alpha did not complete its planned move to 6 inch GaAs before becoming part of Skyworks.
M/A-COM and SandersIn June 2000, M/A-COM announced a deal to utilize the 6 inch GaAs line being constructed at Sanders in Nashua, NH. (Sanders, which was part of Lockheed Martin, was subsequently acquired by BAE Systems.) M/A-COM planned to send teams of engineers to Nashua to manufacture 6 inch MMIC wafers for communication applications once the fab was completed during the first half of 2001.
However, the downturn in the commercial wireless chip market evidently convinced M/A-COM that it had enough internal capacity to meet its own requirements. "At the start of 2001 we had been gearing up to accommodate M/A-COM," said Alan Swanson, director of the Microwave Electronics Group at BAE Systems. "We had started running wafers and building up the infrastructure, but M/A-COM decided not to inhabit the building and never started running wafers in the production sense."
Swanson says that the 6 inch line at the Nashua fab is currently being used to fabricate MESFETs that are used in the F22 fighter plane, while the PHEMT portion of the line is being converted to 6 inch production. "In the past two to three years, our military business has remained roughly constant," he said.
Skyworks stays at 4 inchSkyworks has undergone consolidation since its formation through the merger of Alpha Industries and Conexant s wireless business. The former Alpha/NDI fab in Sunnyvale, CA, was closed in January 2003, after its products were transferred to Skyworks other GaAs fabs in Newbury Park, CA (the former Conexant fab) and Woburn, MA (the former Alpha fab).
The Newbury Park fab was the first to produce commercial AlGaAs/GaAs HBTs, and has now also introduced InGaP/GaAs HBT products. "New designs are being brought up in InGaP, and these make up a reasonable portion of the starts," said Terry Pope, director of the Newbury Park fab. "There are a number of high-volume existing designs that are running in AlGaAs which will be supported for several more years."
All Skyworks GaAs processes are run on 4 inch wafers at present, and Pope says that the Woburn fab will likely remain at that size. Also, while the tool set in Newbury Park is capable of being converted to 6 inch, there are no plans to make the change. "We believe that there is little or no cost advantage to moving from 4 to 6 inch at this time," Pope explained. "With die shrinks and second source supplies we don t need the capacity." Skyworks has a second-source agreement with AWSC in Taiwan to produce HBT wafers. "A wafer size change requires significant effort with little payback at this point," added Pope.
Nortel exits HBT businessNortel was one of the first companies to introduce commercial GaAs HBTs for its internal 10 Gbit/s fiber-optic products. In 2000, the company had plans to double its production capacity by building a second HBT fab near Ottawa, Canada, but these plans failed to materialize. Hit hard by the telecom slump, Nortel sold most of its optical component production capabilities to Bookham Technology, and is now closing its HBT fab.
"We announced [in 2002] our intention to wind down our GaAs activity and to work with third parties to meet our needs for [GaAs HBT] devices," said a Nortel spokesperson. "Our decision was part of our overall strategy to exit optical components so that we could focus on the systems side of our optical business, where we see our greatest competitive strength."
Anadigics poised to growAnadigics was the first company to build a 6 inch GaAs fab for analog ICs (Vitesse concentrated on digital products), and began production in July 1999. In January 2000, the company announced plans to double the size of the fab by adding a further 10,000 sq. ft of cleanroom space. However, as the downturn started to bite, the expansion was delayed, and was not completed until June 2002. But even with the infrastructure in place, Anadigics did not fill all the available space with equipment, according to Darryl Heller, the company s senior director of onshore operations.
"Around one-third of the additional fab space is currently occupied, while the original 6 inch fab is essentially fully fitted out with equipment," said Heller. "Our capacity is labor-limited at present; we could probably double our capacity through additional operator hires." Further increases in capacity can also be made fairly rapidly, by adding more fab tools to the expanded facility. "The fact that Anadigics has the capability to quickly increase its production capacity in a state-of-the-art 6 inch line is a source of confidence for our customers," said Heller.
Like any fab, the mix of different wafer types fluctuates, but a typical breakdown would be 50-75% InGaP HBT wafers for handset applications and 25-35% MESFET wafers for cable and broadcast products, with the balance (around 15-20%) being PHEMT wafers for RF switches.
Northrop GrummanThe $7.8 billion merger of TRW and Northrop Grumman, completed at the end of 2002, brought together two long-established compound semiconductor activities. The former TRW Space and Electronics group, located in Redondo Beach, CA, is now Northrop Grumman Space Technology, which fabricates GaAs and InP ICs, while Northrop Grumman Electronic Systems, located in Baltimore, MD, includes the former Westinghouse GaAs and SiC operation.
"TRW and Westinghouse were teamed with each other in phase 1 of the MIMIC program, so the groups have had a good relationship over many years," says Dwight Streit, VP of Foundation Technologies at Northrop Grumman Space Technology. "The two operations are very complementary; we don t see any transition or consolidation in the near future affecting either facility."
The Space Technology sector operates a newly opened fab at its Space Park campus in Redondo Beach, with 4 inch GaAs and InP lines producing HBT-and HEMT-based ICs. The fab produces MMICs for internal Northrop Grumman programs as well as commercial products, particularly for the telecom market, which are sold through the Velocium brand. Streit sees signs of a turnaround in the telecom market. "Business is definitely picking up again," he said. "2001 and 2002 were very difficult, but 2003 is much improved."
As well as being positioned to take advantage of a turnaround in the telecom marketplace, Streit says that Space Technology s business for government and defense applications is very robust. "Because of the focus on defense during the last two years, business has increased significantly, and Space Technology s revenues are up 25% over 2002," he said. "Almost all the military and commercial platforms we build at Space Park utilize our compound semiconductors." Examples include GaAs MMICs for the advanced avionics systems in F/A-22 and Joint Strike Fighter aircraft. The systems allow millimeter-wave communications between aircraft, minimizing the danger of collisions and coordinating threat defense. Northrop Grumman is also supplying InP MMICs for phased arrays to be deployed in a new satellite constellation (see picture).
Nortel is closing down its GaAs HBT fab, while Skyworks, Filtronic and Agilent have all closed fabs in California. However, the news is not all bleak; Filtronic and Agilent are now concentrating their respective efforts at their 6 inch fabs in Newton Aycliffe, UK, and Fort Collins, CO.
Meanwhile, in North Carolina, RFMD has finally completed the conversion of its second HBT fab to 6 inch operation. Last month, the company announced the completion of the first major customer qualification of its 6 inch manufacturing capabilities. The move was precipitated by rising demand and the need to cut costs. "The conversion to 6 inch wafers will more than double the number of die per wafer without a significant increase in processing cost per wafer," said Curt Barratt, VP of wafer fab operations at RFMD. The company s first fab, which still handles 4 inch wafers, is now operating close to its maximum capacity of 60,000 wafers per year.
Changing plansWhile some companies went ahead with planned expansions by converting to 6 inch operation (e.g. Motorola and TriQuint) or expanding their existing facilities (e.g. Anadigics), others pulled back from their original strategies. NEC announced plans in 2001 to move to 6 inch manufacturing, but currently still has one GaAs IC fab in Otsu, Japan, processing 5 inch wafers. Raytheon, having evaluated a 6 inch conversion, chose to partner with WIN Semiconductor, a new Taiwanese GaAs foundry. Similarly, Alpha did not complete its planned move to 6 inch GaAs before becoming part of Skyworks.
M/A-COM and SandersIn June 2000, M/A-COM announced a deal to utilize the 6 inch GaAs line being constructed at Sanders in Nashua, NH. (Sanders, which was part of Lockheed Martin, was subsequently acquired by BAE Systems.) M/A-COM planned to send teams of engineers to Nashua to manufacture 6 inch MMIC wafers for communication applications once the fab was completed during the first half of 2001.
However, the downturn in the commercial wireless chip market evidently convinced M/A-COM that it had enough internal capacity to meet its own requirements. "At the start of 2001 we had been gearing up to accommodate M/A-COM," said Alan Swanson, director of the Microwave Electronics Group at BAE Systems. "We had started running wafers and building up the infrastructure, but M/A-COM decided not to inhabit the building and never started running wafers in the production sense."
Swanson says that the 6 inch line at the Nashua fab is currently being used to fabricate MESFETs that are used in the F22 fighter plane, while the PHEMT portion of the line is being converted to 6 inch production. "In the past two to three years, our military business has remained roughly constant," he said.
Skyworks stays at 4 inchSkyworks has undergone consolidation since its formation through the merger of Alpha Industries and Conexant s wireless business. The former Alpha/NDI fab in Sunnyvale, CA, was closed in January 2003, after its products were transferred to Skyworks other GaAs fabs in Newbury Park, CA (the former Conexant fab) and Woburn, MA (the former Alpha fab).
The Newbury Park fab was the first to produce commercial AlGaAs/GaAs HBTs, and has now also introduced InGaP/GaAs HBT products. "New designs are being brought up in InGaP, and these make up a reasonable portion of the starts," said Terry Pope, director of the Newbury Park fab. "There are a number of high-volume existing designs that are running in AlGaAs which will be supported for several more years."
All Skyworks GaAs processes are run on 4 inch wafers at present, and Pope says that the Woburn fab will likely remain at that size. Also, while the tool set in Newbury Park is capable of being converted to 6 inch, there are no plans to make the change. "We believe that there is little or no cost advantage to moving from 4 to 6 inch at this time," Pope explained. "With die shrinks and second source supplies we don t need the capacity." Skyworks has a second-source agreement with AWSC in Taiwan to produce HBT wafers. "A wafer size change requires significant effort with little payback at this point," added Pope.
Nortel exits HBT businessNortel was one of the first companies to introduce commercial GaAs HBTs for its internal 10 Gbit/s fiber-optic products. In 2000, the company had plans to double its production capacity by building a second HBT fab near Ottawa, Canada, but these plans failed to materialize. Hit hard by the telecom slump, Nortel sold most of its optical component production capabilities to Bookham Technology, and is now closing its HBT fab.
"We announced [in 2002] our intention to wind down our GaAs activity and to work with third parties to meet our needs for [GaAs HBT] devices," said a Nortel spokesperson. "Our decision was part of our overall strategy to exit optical components so that we could focus on the systems side of our optical business, where we see our greatest competitive strength."
Anadigics poised to growAnadigics was the first company to build a 6 inch GaAs fab for analog ICs (Vitesse concentrated on digital products), and began production in July 1999. In January 2000, the company announced plans to double the size of the fab by adding a further 10,000 sq. ft of cleanroom space. However, as the downturn started to bite, the expansion was delayed, and was not completed until June 2002. But even with the infrastructure in place, Anadigics did not fill all the available space with equipment, according to Darryl Heller, the company s senior director of onshore operations.
"Around one-third of the additional fab space is currently occupied, while the original 6 inch fab is essentially fully fitted out with equipment," said Heller. "Our capacity is labor-limited at present; we could probably double our capacity through additional operator hires." Further increases in capacity can also be made fairly rapidly, by adding more fab tools to the expanded facility. "The fact that Anadigics has the capability to quickly increase its production capacity in a state-of-the-art 6 inch line is a source of confidence for our customers," said Heller.
Like any fab, the mix of different wafer types fluctuates, but a typical breakdown would be 50-75% InGaP HBT wafers for handset applications and 25-35% MESFET wafers for cable and broadcast products, with the balance (around 15-20%) being PHEMT wafers for RF switches.
Northrop GrummanThe $7.8 billion merger of TRW and Northrop Grumman, completed at the end of 2002, brought together two long-established compound semiconductor activities. The former TRW Space and Electronics group, located in Redondo Beach, CA, is now Northrop Grumman Space Technology, which fabricates GaAs and InP ICs, while Northrop Grumman Electronic Systems, located in Baltimore, MD, includes the former Westinghouse GaAs and SiC operation.
"TRW and Westinghouse were teamed with each other in phase 1 of the MIMIC program, so the groups have had a good relationship over many years," says Dwight Streit, VP of Foundation Technologies at Northrop Grumman Space Technology. "The two operations are very complementary; we don t see any transition or consolidation in the near future affecting either facility."
The Space Technology sector operates a newly opened fab at its Space Park campus in Redondo Beach, with 4 inch GaAs and InP lines producing HBT-and HEMT-based ICs. The fab produces MMICs for internal Northrop Grumman programs as well as commercial products, particularly for the telecom market, which are sold through the Velocium brand. Streit sees signs of a turnaround in the telecom market. "Business is definitely picking up again," he said. "2001 and 2002 were very difficult, but 2003 is much improved."
As well as being positioned to take advantage of a turnaround in the telecom marketplace, Streit says that Space Technology s business for government and defense applications is very robust. "Because of the focus on defense during the last two years, business has increased significantly, and Space Technology s revenues are up 25% over 2002," he said. "Almost all the military and commercial platforms we build at Space Park utilize our compound semiconductors." Examples include GaAs MMICs for the advanced avionics systems in F/A-22 and Joint Strike Fighter aircraft. The systems allow millimeter-wave communications between aircraft, minimizing the danger of collisions and coordinating threat defense. Northrop Grumman is also supplying InP MMICs for phased arrays to be deployed in a new satellite constellation (see picture).
