"Nearly 60 years, the area of micro-machining has shrunk by a trillion times from the tube computer to the current 7-nanometer device, in which the key lies in the innovation and advancement of micro-processing equipment in the front stage of semiconductor chips." Zhiyao Yin, Chairman and CEO of AMEC, expressed his feelings at the 2018 China Semiconductor Materials and Components Innovation Conference. As integrated circuit components have been upgraded from “millimeter” and “microscale” to “nanoscale”, the precision, uniformity, stability and reliability of micromachining becomes crucial to improving the success rate of micro device production.
Long Way to Go or the Development of the Equipment Industry
Among the semiconductor manufacturing equipment, there are two kinds of equipment that play the most important role, one is a lithography machine, the other is a plasma etching machine. The lithography machine is the core equipment that mainly used to expose the photoresist-coated substrate for the production of large-scale integrated circuits. The requirements for manufacturing optical lenses and reflective bowls are extremely demanding, and the price of the machine is higher than that of large passenger aircraft. From this aspect, the Dutch ASML can be said to always take a dominating place. Plasma etching is also a critical step in the fabrication of very large scale integrated circuits today. The plasma etching machine forms a volatile reaction product by a physicochemical reaction of the surface, and then withdraws it from the reaction chamber. The etching machine has to etch various materials and different shapes, and has different selectivity for different materials. There are thousands of different etching processes. Moreover, in the etching process, a plurality of indexes such as etching accuracy, uniformity, stability, selection ratio, output amount, and etching cost are required to meet the specified conditions, so as to achieve the specified production efficiency. At present, the three major processing equipment companies in the world of micro-processing, Applied Materials, Lam Research and Tokyo Electronics, all started their business from making etching equipment. China's plasma etching machine is also being developed by several companies, among which the progress of AMEC is so impressing. At present, the capacitive plasma etching machine and inductive plasma etching machine developed by AMEC have entered the international top three in terms of performance and cost performance. Yin introduced that in China, high-end equipment products of AMEC have gradually replaced American equipment, and their market share is increasing step by step. The micro-etching machine of AMEC has entered the most advanced 7nm production line in the world, and approved the etching application of 5nm devices. The market share of dielectric etching ranks third. The ultra-large MOCVD equipment, the blue LED light-emitting device, developed by AMEC have got more than 75% of the domestic market share, replacing most foreign equipment since the end of 2016, which only took one and a half years. Yin revealed that on the basis of 60% sales growth in 2016, the annual sales of AMEC in 2018 will increase by more than 70%, far exceeding the annual sales of high-end micro-processing equipment of other domestic companies. In the “Customer Satisfaction” rating of global semiconductor equipment announced by VLSI Research in May this year, AMEC was ranked third only after Netherlands ASML and a US company, which illustrates the recognition of the international semiconductor equipment industry for AMEC.
All of progress does mean that there is a big step forward for China's equipment industry, but with the rapid pace of IC update, the domestic equipment industry still has a long way to go. At present, among China's IC manufacturing enterprises, the equipment and materials industry and R&D investment can only reach one-tenth of these international giants. With distinct weakness in technology and a completely asymmetrical competition form, the development mode of “single fighting” is impossible to get through.
"China's IC industry needs support and assistance, especially the government`s support. With the assistance of low-cost funds, R&D funding and related policies, enterprises can be able to better handle with the main contradictions in development and achieve rapid development." Yin said.
The "main contradiction" and "seven problems" in the development of China's integrated circuit industry
What are the main contradictions in the development of China's integrated circuit industry? Zhiyao Yin believes that for China's integrated circuit manufacturing and equipment industry, the most major contradiction is "asymmetric competition." The "asymmetric competition" can be reflected in nine aspects. First of all, the company's scale is asymmetrical.
Yin said that though domestic equipment manufacturers are growing fast, the overall market situation is similar to the "Spring and Autumn Warring States period" in Chinese ancient times that there were only three giants and several small emperors. The size of each company is not equal, and even has a huge difference of 10-30 times among them. Secondly, the market share is asymmetric. Thirdly, the domestic and international markets are asymmetrical. Fourthly, the barrier to entry is asymmetrical. Fifthly, the talent resources are asymmetrical. Sixthly, the research and development funding is asymmetric. Yin said that the R&D expenditure of China's integrated circuit manufacturing and equipment companies is less than 10% or even 5% of the leading foreign companies and there has already been a three generations gap falling behind. If the R&D expenses cannot be increased, it will be almost impossible to catch up, while International companies maintain their competitive advantage by 10 to 30 times more research and development expenses than these small companies in China. The serious shortage of research and development funds has made domestic companies face the severe and unprecedentedly challenge. Seventhly, the patent share is asymmetric. Eighthly, the state taxation is the asymmetric. And the ninth one is the asymmetry of the entrepreneurial development environment.
The development of China's integrated circuit industry is positive, but there are still "seven major problems" centered with the "main contradiction". Yin expressed that the development of the integrated circuit industry requires funds, talent and policy. Funds include equity capital investment, long-term low-interest loans and government R&D funding; talents refers to attracting foreign talents, cultivating domestic talents, and supporting leading talents; policies include investment and financing policies, income tax policies, import and export policies, labor law policies, employee option incentives, localization policies, and listing policies.
First of all, for present China's IC industry, investment is increasing, while talents attracting and policies update cannot keep up with the pace. With increasing emphasis laid on the development of the integrated circuit industry in China, the relevant investment funds have increased, but the policy of developing high-tech industries has not yet been perfected, talents and technologies are not in place, and some projects have already delayed, which has constrained the development of the industry.
Secondly, the investment on chip production line is large, while in equipment and materials is small. Originally, the investment proportion in design, manufacturing and equipment materials industry should be 20:60:20, but now more than 90% of the funds are invested in chip production lines, and investment in equipment and materials only takes up less than 5%. Yin said that more attention is required to be paid on the equipment and materials. In order to promote the industrial development, focusing on chip production is indeed, but in a chip production line, equipment and materials take up 70% to 80%. However, the share of imported materials and equipment is still high in current China`s industry. "The money has flowed abroad, and more than 75% of the technology and equipment are still holding in their hands. Such a development model, just like a building built on the sand beach, is too fragile." Yin said.
Thirdly, in terms of the investment structure, equity investment takes large, but long-term low-interest loans and research and development funding is far from enough.Yin said that the world's largest chip fab does not invest a lot of equity capital but can get a loan of 3 to 4 billion US dollars per year with a rather low interest of 1.5%. Owing to the low-cost investment, the fab company can rank first in the world. Thus, Yin believes that the long-term low-interest loan model is one of the methods that can be followed for the development of China's integrated circuit industry.In addition, if companies only rely on their poor income to support research and development, even though they spend 50% that will not be enough.As a result,the government's financial support for corporate R&D is crucial when the company is small.
Fourthly, we must correctly understand the fundamental differences between R&D prototypes and equipment used on production lines, and develop and provide reliable, stable, easy-to-use, efficient and inexpensive equipment to customers. Nine years ago, when the studies from the lighting industry to blue LED stated in China, more than 50 research institutes and companies decided to develop MOCVD equipment. But until now, only AMEC has developed a highly competitive MOCVD equipment, which has completely replaced similar equipment in the US and Germany. There are more than 20 other companies that have also developed prototypes of the laboratory, but they have not yet produced reliable and easy-to-use production equipment. Actually, developing the prototypes only finished 10% of the whole development of equipment products, and there is an extremely large amount of work to do from the development of Alpha production prototypes, to the customer evaluation of the Beta machine, and then to the mass production of the Gamma machine. It is extremely challenging to manage hundreds of material suppliers and thousands of parts and components, and make sure to provide on-time supply, defect-free, low-cost and effective after-sales service.
Fifthly, the development of “bottleneck” key components must be focused on. Yin noted that although the AMEC`s micro-plasma etching equipment has achieved 35% of localization and MOCVD equipment has achieved 65% , but the localization of some “bottleneck” key components has not been fully paid attention to and developed. "This is a problem that China's integrated circuit industry has to face, and it must be broken as soon as possible," Yin said.
Sixthly, the issue of intellectual property protection should be actually valued. Yin expressed that AMEC has established a strict management system on intellectual property rights that: every employee first participating in the company must sign a strict confidentiality agreement, without bringing any technical information and materials from the former company. And AMEC have been thoroughly analyzed more than three thousands of competitive company in details and has clearly understood what is insurmountable and what is ineffective; self-developed technologies and equipment must have unique innovation, and AMEC had applied for thousands of patents to protect their intellectual property rights; intellectual property litigation that the competitive company may launch must be fully prepared. "This kind of management system has helped AMEC become so strong from passive self-defense to active handling for more than a decade." In a number of disputes over property rights that Yin mentioned in his introduction, AMEC could almost won, or took a favorable position to reach a settlement with the other party.
Finally, from the beginning of the establishment, AMEC has adopted an option incentive system with full shareholding. The difference of share option between each level of manager and employees is 20%, which is an extremely flat structure. Yin believes that “employee option incentives and full shareholding are extremely crucial for high-tech enterprise development. There is an old saying in China called “He who has money gives money and he who has strength gives strength”, that is, when investors obtain equity by capital, employees and managers can pay out their labor and innovation to get company option. Options will completely change employees' working concept, enhance their sense of ownership, and motivate them to work better for the company. Step-by-step exercise of options and equity sales can also exert a locking effect, enabling employees to work for the company in a long-term and stable manner." Actually, many successful high-tech companies in the world have adopted the full-share option incentive system, which proves the practicality of the method. It can not only bind the interests of the managers and employees to the long-term development of the company, but also encourage the enthusiasm and ownership of employee to the utmost extent.