Semicon West Wrap, NY / GE Investment, IBM / GlobalFoundries talk

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Tim discusses semiconductor industry news on TWCN’s Capital Tonight (Log in required)

Our intrepid Zone 5 team returned from a busy Semicon West week to be inundated with a major new technology investment in our own backyard, wild and rampant speculation on IBM and GlobalFoundries and even a brief TV appearance by your truly.

Semicon West Wrap

Much like the industry it features, this show has seen some consolidation. I’ve been attending since 2006, and the intensity and energy – though refocused – remains. And of course, there is always one constant at Semicon West – Zone 5 will host a killer reception (6 years running now!) with the best wine list of the week. We were thrilled to have our friends at Marcy NanoCenter co-hosting the event with us. As you can see below, a good turnout for this invitation-only event.

Attendees at Zone 5's 6th Annual Uncork Semicon Event

Zone 5’s 6th Annual Uncork Semicon Event

On the show floor, it was really cool to see multiple booths featuring 450 mm wafers. Of course, the transition to 450 was one of the ongoing debates of the week….is it a question or “if” or “when?” Have advances in EUV pressed pause on the transition? Where will the money come from to make the transition? It is wild times!

Of course, the big story of the week was the announcement of the new name of the Tokyo Electron (TEL) and Applied Materials (AMAT) merger – Eteris. Apparently, this new name is meant to be evocative of “eternal innovation for society.”  As a brand marketer, I have to give the joint team at TEL and AMAT credit. Far too often, the brands of the semiconductor are developed with much less thought. You know, like by jamming a few guys’ names together and hoping for the best. I’m not sure I’m totally on board with the name yet, but I give credit where due – it’s thoughtful, pragmatic and not too hard for a dummy like me to spell. Let’s see where it goes!

Major announcement in New York

I had barely finished doing laundry from the trip to San Francisco when a media advisory crossed the wire sharing that NYS Governor Cuomo would be making a major economic development announcement in Niskayuna. To those unfamiliar with the Albany, NY region, an announcement in Niskayuna can only mean one major technology leader: GE. Niskayuna is home to GE’s Global Research Center (GRC) and several thousand of the brightest minds in modern science and technology.

Tuesday’s announcement was another in a seemingly never-end string of R&D investments by New York State – this one, a 5 year, $500 million commitment to create the New York Power Electronics Manufacturing Consortium (NY-PEMC) to develop and produce low cost, high performance 6” silicon carbide wafers in partnership with the State University’s College of Nanoscale Science and Engineering. For GE’s part, they’ll have access to new, leading edge facilities at the college to develop these wafers, which could have great promise in high power devices and may have a major synergy with the power electronics business acquired by GE just a few years ago, Converteam.

IBM/GlobalFoundries

Throughout Semicon West and this week, the continuing drumbeat on the IBM/GlobalFoundries deal (or battle, depending on your position) gained volume. It has been rumored for months that IBM was looking to unload its chip making business, including assets in East Fishkill, NY and Burlington, VT. In recent weeks, the conventional wisdom in the press seemed to speculate about GF buying the business, then having to decide what to do with the facilities and thousands of workers in a state of flux at those facilities. One of the major questions, of course, would be the future of the trusted foundry certifications of the business if purchased by GF.

That back and forth appeared to reach a crescendo over the weekend, when full page ads appeared in papers in the East Fishkill and Burlington area papers for jobs at GlobalFoundries in Malta, NY. What does this mean for the deal? Really tough to say….and my crystal ball has taken the summer off!

So that’s a wrap to wild week – one that was supposed to be quiet following Semicon West! Keep an eye on the SemiZone for continuing insights we gained at West and keep following us on Twitter for regular updates.

SemiZone: Steven Chisolm of Pall Corporation

We sat down with industry experts at SEMICON West to cull their best business, trends and marketing insights. Here’s what Steven Chisolm of Pall Corporation had to say.

Hi Steve. Thanks for sitting down with us – we love the secret meeting room you have built within your booth at SEMICON West! Can you give us a quick overview of Pall Corporation?Stephen Boyer

Pall Corporation is a multinational company headquartered on Long Island, NY. We’re a material science company. Our key products are filtration and purification solutions for a variety of industries. Those industries include microelectronics, biomedical, pharmaceutical; as well as heavy duty machinery equipment, the energy market and aerospace – basically we cover all high tech and heavy industry.

We’re hearing a lot from folks about the cyclical nature of the industry. What are some of the challenges you see ahead on the materials side?

Fundamentally when we look at the market, we look at it from three facets. What’s going on with wafer starts – with IBM, Global Foundries, etc. In addition, we have a heavy presence with the OEMs – so we take a look at what the book to bill is. Lastly, we look at the material suppliers a well.

What we’re seeing is a slowing in CapEx, so that’s affecting some of the equipment buys and affecting some of that revenue associated with OEMs. But, the material market is very strong. You have a lot of new materials coming on board and be utilized in processing – that market is very strong for us.

What do you see as the big technology push and pulls with your customers?

You have to look at IBM and the foundries; it all becomes, for us, about uptime and yield. Our products are the enablers of process, so we make sure that our products don’t add contaminants because we’re suppose to take them out. At the same point and time, we try to make them ergonomically correct so if we’re in a situation where (our customers) have to make change outs on tools, we’re not impacting their downtime.

The R&D side, whether it be directly related to 450 or related to 1X nodes, is still robust.

You’re one of the companies that tells your brand story really well. Who else in the industry has mastered marketing?

I think that of the large companies – the large capital equipment companies – everyone knows those brands. Those brands are very tight. The material companies as well. Anyone who plays in the space wants to have scale and presence do a good job at projecting their brands.

M&A is big the in semiconductor industry right now. As someone who operates across many industries, where do you see opportunities for multi-industry convergence?

The one thing that I’ve talked about for a while is the idea of digital convergence. When we start to take a look at what how these consolidations come about, we look at, for example, the display space on the semiconductor side. People start to talk about how flexible electronics was only a dream 10 or 15 years ago, but is now a reality. We think we’re poised well to take advantage of that because of the presence that we have in displays and also ink jet; marry that into semiconductors and people talk about flexible displays. What is going to drive that is flexible display and flexible electronics and the whole idea of wearable electronics. That’s another area of the industry to look to for growth.

Looking ahead to 2015 – how do things look?

(2014) has been an OK year so far – slightly muted. The jury is still out on 2015. It’s the economy. So much of microelectronics is controlled by the consumer; it’s a consumer business at the end state with the device. What happens with the GDP and consumer confidence will affect things.

This industry is predictably unpredictable. What is your advice for companies look to ride out the down and make hay on the upside?

The most successful companies will keep their R&D turning throughout a down cycle. They should keep their people who are excellent on the street – since it’s about making sure you’re in constant contact with your customer. You have to resist the idea of running your business to the cycle. And, you have to constantly invest because that what this industry is. The people who do those things well will succeed.

SemiZone: Joe Cestari of Total Facility Solutions

We’re sitting down with industry experts through the week at SEMICON West to cull their best business, trends and marketing insights. Here’s what Joe Cestari of  Total Facility Solutions had to say.

Joe – tell us about your company, Total Facility Solutions.

Our primary focus is mechanical and electrical contracting, more specifically process system solutions for the semiconductor industry, but also biopharmaceutical, and science and research markets.

When did you first attend SEMICON West? What’s changed?Total Facility Solutions' Joe Cestari

1986! Back then it was a different venue. People wore flip flops, had trailers with BBQ, and you could actually secure a purchase order. Today, resumes trade hands more than not.

All we knew in 1986 was what we didn’t know. For the first 15 years, it was the place to come and learn the secrets of the industry. And now you know the secrets within nanoseconds of when they happen. Or, more importantly, you create the secrets because, I believe in this industry, rumors become reality in 6 months or less.

Given that, how has TFS approached it’s participation in SEMICON West?

For TFS, SEMICON West is about the efficiency of putting together meetings and opportunities – no different than how we look at what we do every day in building and looking at the most efficient way to construct things. For us, having 25 meetings in 3 days is something you can’t do logistically or financially otherwise. We leverage our global network while here.

What’s your perspective on the changing cycle of the industry from a builder’s perspective?

For one, the cycle of the whole industry has compressed significantly.  What that means for all of us is much faster adaptation. Toolsets and process recipes change –  literally – daily. Flexibility is the key.

The days of building a single facility for a single product are gone. That dynamic of change for us, as somebody that’s doing equipment installation and fab construction, is a challenge. It was one thing to move a tool in 4 hours. Today to move a piece of equipment could take 2 weeks and hundreds of thousands of dollars. Planning is critical.

Sometimes as a customer, with the way the market is going from an end demand standpoint, you don’t know early enough what you need to be building… you don’t know what your toolset is, which means you don’t know which gases and materials you need. Yet, for us (as builders), the material lead times haven’t changed. We’re left to deal with that unaltered factor when we only have 4 days to react to a change from our customer. It’s a phenomenon for us.

Sounds like that puts manufacturers in a tough spot.

The supply chain and the number of players is shrinking. We used to talk about collaboration and not implement. Now the dynamics have changed back to where collaboration is absolutely necessary. Without a collaborative environment, things won’t get done. Collaborative discussions need to happen all the time, in real time.

We’re marketers at Zone 5, so we always like to ask: who do you think is telling their story well is this industry?

Well, I consider myself a wanna be marketer!

On one hand, people say this industry doesn’t need marketing – everyone knows everyone. And print advertising in this business is essentially gone. So that leaves you with a technology driven business that’s looking for a technology in the marketing arena.

There are those that have been so dominant in their success in terms of performance that their brand has followed their reputation (i.e. Applied Materials). On the other end of spectrum, there’s still as much start up activity and as much innovation in the small company environment as there ever has been. There are people in that space believe that marketing is important and that you need to get your story out. Communicating why should someone buy their product or technology is more important than ever.

Joe CestariFUN FACT: Joe grew up on Long Island, but is now based in Texas. Hence these beautiful boots!

SemiZone: Dan Hutcheson of VLSIresearch

We’re sitting down with industry experts through the week at SEMICON West to cull their best business, trends and marketing insights. Here’s what Dan Hutcheson of VLSIresearch had to say.

You’re the CEO of VLSIresearch – tell us a little about the company.

We track the semiconductor markets. We follow the data, trying to figure out where the next twists and turns are going to come in this crazy industry.

VLSIresearch's Dan Hutcheson

VLSIresearch’s Dan Hutcheson

We’re seeing a lot of talk this week with the challenges of 450. What are you hearing on the ground from companies regarding 450 integration?

Realistically, the push for 450 has slowed down since SEMICON last year because there wasn’t a strong industry consensus. No one is worried about building the next 450 fab; instead, they are moving forward in a long step fashion. With the industry turning up, they need capacity so there has been more investment. Between new demand and the fact the 450 question seems to be over, that’s what’s driving the industry this year.

Great point about capacity. Where do you see capacity and decision points right now?

Capacities are really important right now. Every (industry) cycle I’ve been through, I see companies making the same mistake and that’s companies looking at the capacity they have based on the products they are producing today and think we have tons of capacity. And, next year when new designs are hitting the fabs and they need completely different capability and they find that they didn’t have the capacity they thought they did. It’s a really dynamic game they wind up scrambling into.

Where do you see numbers landing through the end of the year?

If we look at the semiconductor market in the 1st quarter, it ended about 11% above where it’d been the year before.  It’s coming in about 12-13% ahead this quarter – it’s a pretty hot growth year. The other thing that’s really new is there’s a lot more growth for silicon demand. That’s driving a need for more capacity.

As branders we’re always looking at is how people are telling their story.  What do you see as the great branding story in the industry this year?

The big story is the new Applied Materials and Tokyo Electron Limited. That’s the big branding story of this show. Eteris stands for eternal innovation for society. It’s naming something that has a real meaning to it. One really good thing about this new brand is it’s a clear communication to every employee in that organization to focus on innovation.

How has marketing landscape shift affected your company?

It’s really changed. Conventional media has been flipped on its head by social media. The impact of it for us is, we do a lot more social media marketing. We do SEO. We publish weekly e-newsletters.

FUN FACT: Dan has a passion for photography. He bought a digital camera in the late 90s and quickly found himself doing more with the medium. As he traveled, his customers caught glimpses of his work and encouraged him to integrate his photography into his business. Today, he incorporates these visuals into his presentations, adding a different flare to his industry take.