Analyst: R&D consortia vital for chip equipment future

TechOnline India - September 07, 2009

Spending on research and development in the semiconductor equipment industry is set to be slashed, with an $8 billion decline seen over the next five years, according to market trackers Gartner.

LONDON — Spending on research and development in the semiconductor equipment industry is set to be slashed, with an $8 billion decline seen over the next five years, according to market trackers Gartner.

This could put the whole sector at risk, the researchers warn. Howerer, the growth of R&D consortia is coming to the rescure, suggests Gartner senior analyst Dean Freeman.

Gartner notes that R&D has averaged about 15 percent during the past 15 years, while device spending has averaged about 11 percent. In a high-revenue year, this value declines as a percentage of revenue, while in a low-revenue year, the percentage of R&D increases because R&D levels historically do not get cut during a slowdown.

Failure to properly invest will mean that the technology road map slows and that companies will not be prepared to meet the challenges ahead. With the current slowing in revenue, the semiconductor industry is thus at one of its crisis points.

However Freeman believes the industry appears to be rising to meet this challenge.

The key differentiator this time round is the number of industry consortia that have been formed over the pat ten years. This, he adds, has to some extent mitigated the effects of declining corporate revenues going into R&D.

"The semiconductor industry has grown as a result of university professors working with Semiconductor Research Corp. (SRC), as well as the formations of Albany NanoTech, IMEC, the IBM alliances and some other smaller working groups," Freeman suggests.

These organizations are focusing the available R&D funding in a precompetitive environment to address the key needs of the industry, he adds.

"Through the consortia, high-k metal gates, EUV lithography and through-silicon vias are all being explored and brought to life. As a result of the targeted research, significant R&D savings are realized, and the research agenda is better-focused. "

Freeman thus concludes that, even as the industry faces many challenges in getting to the next generation of technology, "lack of R&D funding apparently will not be part of the equation, thanks to the research consortia."

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