VLSIresearch - Semiconductor Wafer Test Workshop

Test Economics Driving 

SWTW -- June 2009 

Test Technology 

A storm blowing into Lake McDonald. Waterton-Glacier International Peace Park World Heritage Site, Montana 

VLSIresearch 

VLSIresearch.com weSRCH.com chiphistory.org 

Copyright © 2009 VLSI Research Inc. All rights reserved. Reprinted with permission from VLSI RESEARCH INC. 

1

Market Observations 



2

Half of The Chip Recession Was Caused by 

Overspending in Taiwan Memory 

Capital Expenditure Ratio by Market Type 

140% 

120% 

100% 

Nan, Inot, PrM, PChp 

Mic, Span, Elp, Tosh, Hy, Sam 

AMD, IBM, Intel 

Chart, TSMC, UMC 

NSC, TI, & Mats 

80% 

60% 

40% 

20% 

0% 

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 

Copyright © 2009 by VLSI RESEARCH INC. All rights reserved. 



3

Deep-Freeze Has Subsided 

Temperature in Degrees F 

120 

110 

100 

90 

80 

70 

60 

50 

40 

30 

20 

10 

0 

-10 

-20 

Jan-05 

Feb-05 

Apr-05 

May-05 

VLSI's GLOBAL CHIP MAKING CLIMATE TREND INDEX 

(Average of Regional Order Activity Patterns in Chip Equipment) 

Grow th Decline Line 

Negative Concerns: 

- Global economy in recession, 

could be entering a depression. 

- Confidence Lost, Caution prevails 

- Unemployment soaring 

- Consumer debt payoffs 

- Excess capacity in memory & 

foundry 

- No access to funds 

Jul-05 

Sep-05 

Oct-05 

Dec-05 

Jan-06 

Positive Drivers: 

+ G20 govts w orking in concert 

+ U.S. money supply rising 

+ Gas prices declining 

+ Declining IC inventories 

+ 32/28nm Ramp 

+Consumer confidence rising 

+Memory capacity is burning 

+Test&Assy capacity tightening 

+CPPI is hot 

Mar-06 

May-06 

Jun-06 

Aug-06 

Oct-06 

Nov-06 

Jan-07 

Feb-07 

Apr-07 

Jun-07 

Jul-07 

Week 

08/07: 

Financial 

markets 

tumble. 

Order activity inched higher, hitting 58 degrees on the 

back of improving industry fundamentals. Equipment 

suppliers are becoming more optimistic about their 

outlook. Chip prices and utilization rates are increasing. 

Demand is also picking up, prompting several memory 

suppliers to increase production. They believe that 

demand is now strong enough to soak up the increases in 

supply. This will eventually translate into capacity buys. 

Check below for the Customer Weather. 

Sep-07 

Oct-07 

Dec-07 

Feb-08 

Mar-08 

May-08 

Jun-08 

Aug-08 

Oct-08 

Nov-08 

RESTRICTED DATA: for access and use only w ithin your company. Copyright © 2009 by VLSI Research Inc. All rights reserved. 

09/08: 

Financial 

markets 

crashed 

forcing govt. 

intervention. 

10/08: Cisco 

warns. 

01/09 

Samsung 

reports its first 

qua rterl y l oss. 

Qimonda 

bankrupt. 

Jan-09 

Mar-09 

Apr-09 



4

Six Month Improvement in 

Spot Prices 

VLSI's Spot Market Chip Price Performance Index 

330 

320 

310 

300 

290 

280 

270 

260 

250 

240 

230 

220 

210 

200 

190 

180 

170 

160 

150 

140 

130 

120 

110 

100 

90 

80 

70 

60 

50 

VLSI's CPPI 

24 Month Moore's Law Cycle 

12 Month Moore's Law Cycle 

Spot Prices:Stable ML Gap: From +23.3 to +24.3 

VLSI's CPPI finished the last w eek of May on a positive note, 

increasing 0.3 points. Memory spot prices remained soft, but MPUs 

picked up the slack and finished the w eek higher. The overall level of 

activity in the spot market w as light as traders continued to retreat. 

Many fear that the impending increases in memory production could 

w eaken prices again. How ever, memory suppliers appear confident 

that demand is strong enough to absorb the increases in supply. It’s a 

gamble that w ill likely help the leading suppliers, w hich have the funds 

to shrink and low er the manufacturing costs. How ever, the ones that 

are behind the technology curve could end up losing more money. 

5/11/2009 

4/6/2009 

3/2/2009 

1/26/2009 

12/22/2008 

11/17/2008 

10/13/2008 

9/8/2008 

8/4/2008 

6/30/2008 

5/26/2008 

4/21/2008 

3/17/2008 

2/11/2008 

1/7/2008 

12/3/2007 

10/29/2007 

9/24/2007 

8/20/2007 

7/16/2007 

6/11/2007 

5/7/2007 

4/2/2007 

2/26/2007 

1/22/2007 

12/18/2006 

11/13/2006 

10/9/2006 

9/4/2006 

7/31/2006 

6/26/2006 

5/22/2006 

4/17/2006 

3/13/2006 

2/6/2006 

1/2/2006 

Week Ending 

RESTRICTED DATA: for access and use only within your company. Copyright © 2009 by VLSI Research Inc. All rights reserved. 



5

Inventories Are at Normal Levels 

IC Inventories 

30 

2.5 

Total Inventory ($B) OEM IC Inventory ($B) 

Die Bank ($B) Total Inventory to Billings Ratio 

25 

20 

15 

10 

5 

2 

1.5 

1 

0.5 

0 



6 

JAN '04 

MAR 

MAY 

JUL 

SEP 

NOV 

JAN '05 

MAR 

MAY 

JUL 

SEP 

NOV 

JAN '06 

MAR 

MAY 

JUL 

SEP 

NOV 

JAN '07 

MAR 

MAY 

JUL 

SEP 

NOV 

JAN '08 

MAR 

MAY 

JUL 

SEP 

NOV 

JAN '09 

MAR 

MAY F 

Billions of Dollars 

Inventory to Billings Ratio 

0

Utilization Rates Recovering 

CAPACITY UTILIZATION RATES 

(chip production/manufacturing capacity, in %) 

100 

95 

90 

85 

80 

75 

70 

65 

60 

55 

W.W. Front End Utilization 

W.W. Test Utilization 

W.W.Assembly Utilization 

50 

2005 JAN 

MAR 

MAY 

JUL 

SEPT 

NOV 

2006 JAN 

MAR 

MAY 

JUL 

SEPT 

NOV 

2007 JAN 

MAR 

MAY 

JUL 

SEPT 

NOV 

2008 JAN 

MAR 

MAY 

JUL 

SEPT 

NOV 

2009 JAN 

MAR 

MAY F 

JUL F 

SEPT F 

NOV F 



7

Semiconductor Business is Improving 

-11% 



8

Drivers for Next Upturn 

• Mobile Internet Device (MID) 

•Windows 7 

•SSDs 



9

Questions 

• Does this economic downturn affect Moore’s law? 

– Not really 

• When do you think the industry will be moving to 

450mm diameter wafer? 

– 2020 

• Do you predict more consolidation in big companies 

especially in Memory market? 

– Absolutely 

• Can you comment on the current trend of smart 

phones taking on more personal computer 

characteristics and what that means for the various 

semiconductor market segments? 

– Processors alone can be $20 – $30B 



10

Market Summary 

• Semiconductor industry was healthy 

entering into this recession. 

• Semiconductor business is returning to 

normal but lower operating levels. 

• Spot prices improving. 

– Production cuts help tremendeously 

• Capex still remains very low. 



11

Probe Card Market 



12

Top Probe Card Suppliers 



13

Probe Card Forecast 

Probe Card History & Forecast 

1,800 

1,600 

Total Probe Card & Related Revenue: 

Spares & Service Revenue: 

1,400 

1,200 

1,000 

$M 

800 

600 

400 

200 

0 

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 



14

Probe Card Revenue Distribution 



15

And The Data 



16

Questions 

• With so many private companies supplying 'front-end' 

hardware (probes, boards, sockets, etc.) for test & 

burn-in, what is the reliability of collected market 

information; how are 'blind spots' mitigated? 

– We drive to about 80% survey response coverage (revenues), 

probe card report was close to 90% 

• And more and more we see semiconductor 

manufacturers transferring test coverage complexity 

into the tester interface (probe card) thereby increasing 

the cost of the cards and making the conscience 

decision to not upgrade testers. - The long-term 

implications of this trend are thought provoking. 

– I can not tell but see the data in next few slides 



17

Challenges in Test 



18

Buy Rates Show That 

No Glut in ATE 

ATE Buy Rates 

(ATE sales as a % of device sales) 

6.0% 

5.0% 

Memory 

Non-Memory 

4.0% 

3.0% 

2.0% 

1.0% 

0.0% 

1991 

1992 

1993 

1994 

1995 

1996 

1997 

1998 

1999 

2000 

2001 

2002 

2003 

2004 

2005 

2006 

2007 

2008 

2009F 

Year 



19

ATE is Less Than Half of 

Total Test Hardware Spending 

TEST HARDWARE SPENDING 

10000 

9000 

8000 

Interface Boards 

Sockets 

7000 

Probe Cards 

$M 

6000 

5000 

4000 

3000 

Handlers 

Probers 

Other ATE 

2000 

1000 

0 

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 

Copyright © 2009 by VLSI RESEARCH INC. All rights reserved. 

Reprinted with permission from VLSI RESEARCH INC. 

SOC ATE 

Memory ATE 



20

Rapid Decline in ATE Buy Rate 

Test Hardware Buy Rates 

3.5% 

3.0% 

2.5% 

Probe Card & Sockets 

Handlers & Probers 

ATE 

2.0% 

1.5% 

1.0% 

0.5% 

0.0% 

2003 2004 2005 2006 2007 2008 

Copyright © 2009 by VLSI RESEARCH INC. All rights 

reserved. 



21

Drivers for Declining ATE & 

Material Handling Buy Rates 

• End of Functional Testing Era. 

– Testers cost less. 

• Large Scale Implementation of DFT. 

• Modular Tester 

– Upgrade cards only, higher utilization 

• Parallel Testing 

• OSATs increasing share of testing. 

– Higher utilization, efficiencies due to business model. 

• Testing less 

– Probe card & socket data does not agree. 



22

Problem of The Last Decade 

– IC ASPs 

IC Average Selling Prices 

2.20 

2.00 

'98 - '08 CAGR = -3.2% 

1.80 

1.60 

1.40 

1.20 

1.00 

1998 

1999 

2000 

$ 

2001 

2002 

2003 

2004 

2005 

2006 

2007 

2008 



23

Test Has Responded to the 

Challenge 

ATE Capital Cost per IC Unit Shipped 

(ATE, Handler and Prober Depreciation Cost per IC) 

0.120 

7.0% 

0.100 

6.0% 

0.080 

5.0% 

4.0% 

0.060 

0.040 

0.020 

ATE Capital cost per IC unit 

ATE Capital cost as % of IC ASP 

3.0% 

2.0% 

1.0% 

0.000 

0.0% 

1982 

1983 

1984 

1985 

1986 

1987 

1988 

1989 

1990 

1991 

1992 

1993 

1994 

1995 

1996 

1997 

1998 

1999 

2000 

2001 

2002 

2003 

2004 

2005 

2006 

2007 

2008 



24

Questions 

• Relative test costs per unit are increasing, 

what are the best ways to reduce them? 

– Data shows that hardware cost portion has declined 

• Regarding trend of outsourcing test to 

subcons, which difficulties do you expect for 

the "old fashioned" manufacturers? 

– Product differentiation is the key 

• How will things shake out w/r/t the 

juggling/changes in the top suppliers? 

– ATE & probers are ok w/ 3 suppliers. Others will 

see number of suppliers to decline. 



25

Summary 

• Deep freeze in semiconductor manufacturing is 

easing. 

• Expect probe card and socket business recovers 

sooner than ATE. 

– Back-end consumables/materials are already 

bouncing back. 

• Test hardware is $6 - $7B business. 

– Understanding the dynamics of the industry helps 

both the suppliers and chip makers. 

• Test has responded to declining ASPs and 

continues to do so 



26

Thank You 

VLSIresearch 



27

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