Chip shortage and FAB performance, part 3

Today only a very short post !

Very interesting poll results ! Of course the poll left a lot of things open to free interpretation and assumptions, but as expected voters had different opinions. Here is the feedback chart:

The same data in the context of the operation curve:

If I ignore the outliers at the 250 and 500 wafer starts per day mark the largest group of voters would trade

1 X factor of FAB speed for 100 additional wafer starts per day

and start 800 wafers per day instead of 700. Lets try to convert this into more understandable numbers:

1 X factor = 1 raw process time – for a “typical FAB” this could mean anything between 10-25 days of FAB cycle time. On the other hand, what do +100 wafer starts per day mean financially ?

Let’s assume there is an average profit of $150 per wafer – an additional 100 wafer start per day would add up to 100 x 365 = 36,500 more wafers per year or $5,475,000 more profit per year. This seems like an absolute no brainer.

How about an additional $5.5 Million dollar profit if we go to 900 wafer starts per day or $11 million additional profit ? Now the cycle time penalty looks very different. We would pay with 4 X factors or 40 – 80 days more FAB cycle time – still a no brainer ?

Here is a table for how this would look – assumption FAB raw process time = 20 days

I think it comes down to the famous question:

What is the value of FAB cycle time – the value in $$ ?

Based on the table above it seems like shorter FAB cycle times are not really desirable, but at some point customers will turn away to order wafers from someone else – if lead times between order placement and actual wafer delivery are too long …

Experienced wafer FAB practitioners know that shorter overall factory cycle times can have a lot of positive effects:

  • faster learning cycles to improve yield
  • lower overall FAB WIP – lower overall inventory cost
  • lower overall FAB WIP – lower risk of excursion impact
  • faster detection of possible process issues
  • faster reaction capability on demand / product mix changes
  • likely better on-time delivery for low volume products

The question really is: Until which point is it more beneficial to run the FAB faster (lower cycle time) since the benefits of being fast or outweighing the benefits of higher profit due to higher FAB output ?

I can not resist to put up another poll here to see, what the readers think is the value of 1 day of shorter (or longer) FAB cycle time. For our example factory above – running at these parameters:

  • 800 wafer starts per day
  • X factor of 3 or 60 days total FAB cycle time
  • about 47,500 wafers of total FAB WIP
  • 98% manufacturing yield (wafer scrap based yield)
  • 90% die yield (electrical yield)
  • cost per wafer of $1,000
  • selling price per wafer of $1,150
  • selling price more or less stable (chip shortage driven)
  • high product mix in the FAB (greater 250 different products, running on more than 100 routes)

I can’t wait to see the results. To give a few more readers a chance to vote, I will keep this poll open for about 3 weeks – so the next post will be some time end of February.

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