Autonomous vehicles, data clouds, smartphones, and chemical profits. The fourth item on this list seems out of place, but it belongs. As the tools consumers use get more interconnected and the most mundane objects come endowed with smart capabilities, profits are surging at chemical firms that supply the materials used to make them.
Profitability is high—reaching record levels in some cases—at most chemical makers that have a large exposure to electronics. It is clearly the best of times for companies supplying the electronics industry. But it may not last.
A recent meeting of electronic materials suppliers in Seoul, South Korea, revealed that they face many challenges, even in the current boom times. R&D is becoming increasingly challenging. Product cycles are becoming shorter. Semiconductor manufacturers are reluctant to open up about their product development efforts. And to top it all off, a trade war is on the horizon.
But for the time being, euphoria rules as suppliers of materials used to make microchips enjoy great profitability. Shin-Etsu Chemical, the world’s largest producer of silicon wafers, reported record net earnings, 17% higher than a year earlier, in its fiscal year ending March 31. Other suppliers of electronic materials, such as Air Liquide, JSR, Fujifilm, and Tokyo Electron, also posted good profits in recent quarters.
The U.S. firm Entegris, a supplier of materials and components to the electronics industry, reported its best quarter ever in the first three months of 2018. “Industry trends continue to be positive for Entegris, as the semiconductor industry’s intersecting needs for new materials and increasing purity requirements are driving new market opportunities,” stated Bertrand Loy, the company’s CEO, when announcing the results. Entegris’s exposure to the electronics sector increased in 2014 with the acquisition of the materials supplier ATMI.
The strong financial performance can be explained by a nearly ideal set of conditions. First is the fact that the world is generating, processing, and storing more data than ever. Sven Van Elshocht, R&D manager at Imec, noted in May at the South Korean conference that a single research organization, the European Organization for Nuclear Research, generates 50 petabytes—50 million gigabytes—of data annually.
“We are going through an explosion in data,” he said. Imec is a Belgium-based research organization focused on nanoelectronics and digital technologies. Van Elshocht was a keynote speaker at Strategic Materials Conference Korea, organized by SEMI, an industry group representing companies that supply the electronics industry.
The use of electronics by the auto industry is another contributor to rising demand for microchips. “It’s not so much that there are more cars on the roads but rather that there are more electronics in each car,” Mark Thirsk, managing partner of the electronic materials consulting firm Linx Consulting, said at the conference. Newer technologies in machine learning, virtual reality, and personalized medicine are also boosting demand for data storage and processing, he noted.
On top of using electronics more extensively, China is contributing to growth in demand, Lita Shon-Roy, president of the electronic materials consulting firm Techcet, tells C&EN. Several semiconductor plants are coming on-line in the country, but Chinese chemical firms aren’t able to supply them with all the needed materials. Initially, the new Chinese facilities will rely to a large extent on foreign suppliers, she says.
For the next few years, the market for certain electronic materials will expand faster than the overall economy, Thirsk forecast. This growth stems from demand plus changes in manufacturing techniques, he and other speakers pointed out.
Imec’s Van Elshocht noted that multiple patterning of circuit lines on silicon wafers via photolithography is contributing to a surge in demand for photoresists, deposition materials, and cleaning solutions.
Multiple patterning refers to the repeated application of lithography to create a single layer of chip circuitry. Used for advanced circuits with a width of 10 nm or less, multiple patterning is materials intensive because photoresists, cleaning solutions, chemical-mechanical planarization (CMP) slurries, and other materials are applied repeatedly—compared with only once per layer with earlier-generation circuitry.
The commercial implementation of extreme ultraviolet (EUV) lithography will also lead to strong demand for new materials that will, presumably, provide healthy margins to the companies that are able to supply them. EUV is a new type of photolithography that relies on expensive scanners made with precise optical components. Among the unique traits of EUV lithography is that photomasks are exposed in a vacuum. After many years of delay, EUV is about to come into commercial use.
ASML, a manufacturer of semiconductor lithography systems, shipped 10 EUV scanners in 2017, said Roderik van Es, the firm’s director of service and product management for EUV. In 2018, he said, the company expects to double the installed base of the machines worldwide as chips featuring 7-nm circuit lines emerge. Keundo Ban, a principal engineer at the chip manufacturer SK Hynix, noted that although EUV lithography is an expensive manufacturing technique, costs are becoming competitive with those involved in multiple patterning.
For the past half century, constant innovation, such as multiple patterning and EUV, has enabled chip manufacturers to unfailingly deliver on Moore’s law, an observation made in 1965 by Intel founder Gordon Moore that the number of transistors in an integrated circuit doubles every two years. But fulfilling the prediction is requiring more and more effort.
“It takes 18 times more researchers than it did in the 1970s to double every two years the density of computer chips,” Imec’s Van Elshocht said. For materials manufacturers, EUV and other new chip-making techniques on the horizon will present challenges. An EUV scanner, for example, costs more than $100 million—more than materials companies can afford. They will have to borrow access to one in order to develop materials for EUV lithography.
Even materials already on the market were developed at great expense, both financially and scientifically, several speakers pointed out. Before BASF can supply a new cleaning formula to a chip manufacturer, company scientists have to study at the molecular level if it will unexpectedly react with other materials on the wafer, explained Boris Jenniches, the firm’s vice president of electronic materials business management in the Asia-Pacific region.
Such molecular-level study is definitely required in the realm of CMP, a technique for smoothing layers of circuitry with rotating pads and abrasive slurries.
After the smoothing, the abrasives must be removed with post-CMP cleaners and brushes. Daniela White, a senior principal scientist at Entegris, said that when low-pH cleaners are used, residual silica particles that are supposed to be removed from a wafer have a tendency to bond via hydrogen bonding with the surface of the brushes, leading to further wafer contamination. Entegris developed an additive to disrupt particle bonding.
The electronics industry will soon require totally new types of materials, Imec’s Van Elshocht said. Copper, the standard interconnect metal, has not been performing as required ever since circuit lines became thinner than 15 nm, about two years ago. Intel announced late last year that it will start using cobalt interconnects for chips with 10-nm circuitry. According to Van Elshocht, ruthenium also shows promise.
Looking ahead, Van Elshocht said graphene will likely be integrated into chip manufacturing within a decade. “We still don’t know how to put graphene on a surface without defects,” he noted. The industry is also looking at the polymerase chain reaction as a possible way to enable mass storage of data in DNA. DNA-based storage is currently feasible, he said, but the cost is prohibitive.
Whatever materials the electronics industry requires in the future, chemical producers can expect erratic cooperation from chip makers. While two chip company representatives spoke at the South Korean event, their presence served to highlight the almost adversarial relationship they maintain with their suppliers.
Promising to work much more closely with suppliers, Hyun-woo Kim, a vice president at Samsung Electronics, urged materials suppliers to come up with cheaper materials for use in multiple patterning. He also asked—almost demanded—that chemical producers develop improved EUV materials. “We need better photoresists and ancillary materials,” he said.
Ban, the SK Hynix principal engineer, was on the verge of berating the audience. “Problems with materials led to lower manufacturing yields at our plants in the past two years,” he said. “You need to check your processes, your materials, and your delivery methods better.”
The remarks invited a protest from a South Korean attendee who said, “It would help if you explained better what you exactly need rather than complain about our quality controls.” According to Linx’s Thirsk, chip makers routinely state their desire for closer collaboration with materials suppliers, but the reality is that the deeds rarely match the words.
On top of growing technical challenges, in recent weeks a possible new hurdle has emerged that has little to do with industry dynamics. “The elephant in the room is the trade war,” Techcet’s Shon-Roy says, referring to the trade sanctions and retaliatory actions being implemented by the U.S. and its main trading partners. Electronic materials, even if they are not targeted by trade actions, will be impacted. “The supply chain is globalized, and many materials need to cross borders,” she says.
It may be golden times for electronic materials suppliers, but with so many shadows looming, they might not last for long.