Reuters Summit - High costs may delay new wafer technology

PARIS (Reuters) - High investment costs for production equipment to make bigger silicon wafers that would dramatically lower chip production costs could put a promising technology on hold for some time, an industry expert said.

Silicon wafers are available in a variety of sizes, and the biggest is currently 300 millimetres in diameter. But large companies such as Intel are gearing up to make 450mm wafers to improve efficiency and reduce costs.

"450 is on top of the agenda," Heinz Kundert, president of European chip industry association SEMI Europe, told the Reuters Global Technology Summit on Monday.

"There is no fab available for 450," Kundert said, referring to chip manufacturing plants. But if Intel pushes the technology, peers TSMC and Samsung will follow, he said.

Intel has said it plans to invest between $6 billion and $8 billion to expand high-tech manufacturing facilities in Arizona and build a new site in Oregon, which would be able to produce 450mm wafers.

Kundert warned that the industry was undecided and that in light of massive costs to upgrade production plants the equipment industry was sceptical.

A 25-year veteran of the semiconductor industry, Kundert said the cost of setting up a fab capable of making 450mm wafers would run to about $8-10 billion.

In addition, he said, a white paper on the subject did not find a credible case for the technology due to the high costs and the lack of expected savings in view of the previous big transition to 300mm from 200mm wafer technology.

"The scale-up to 300mm wafers did not significantly reduce the net manufacturing costs for the industry as a whole, and definitely not anywhere near its touted 'savings' of 30 percent," according to the white paper.

The document was issued in June 2008 but its findings were still valid, Kundert said.

"There is considerable resistance to moving up to 450mm by 2012 despite the obvious productivity enhancements, mainly because companies feel it would take too long to recoup their investment," the paper also found.

Kundert added, however, that "if this comes in 2015, 16, 17, this would redefine the industry from scratch".

(Editing by James Regan)