While that is proving true generally, one company has managed to crank out a tool that can handle the 12-inch wafers for less than the cost of a comparable tool for 8-inch wafers. San Jose, Calif.-based Novellus Systems this week unveiled the Vector, a cheaper tool for applying the insulator that goes around the metal wires on a chip.
"It's just what the industry is asking for," said Banc of America chip equipment analyst Mark FitzGerald. "It's a category killer."
The move to making chips from dinner-plate-sized wafers, as opposed to salad-plate-sized ones, has been the highlight of the Semicon West show now going on in San Francisco. On Monday, chip gear leader Applied Materials debuted 21 new tools to handle the various steps of making chips out of the larger wafers.
Chipmakers are expected to scoop up lots of the new tools as they build new, next-generation chip factories, known as fabs. An industry survey released today forecast that the chip equipment industry will rise 37 percent this year to $34.5 billion, and 23 percent next year to $43 billion.
The cost of building a new plant capable of handling the larger wafers is "north of $2 billion," FitzGerald said, compared with about $1.5 billion to build a fab using the current generation of tools. The higher cost is justified because a chipmaker can get 2.5 times as many chips from a 12-inch wafer as an 8-inch one.
More than 26 fabs capable of processing 12-inch wafers are expected to be under construction by next year, according to Strategic Marketing Analysis.
So the possibility of cutting costs on a tool is just about irresistible for chipmakers, analysts said. The Vector is expected to have an average price tag of about $1.6 million, compared with around $2.6 million for a similar tool today.
FitzGerald estimated Novellus could see $300 million in revenue from Vector in fiscal 2001 and said the company has already won business from industry leaders such as Intel and Texas Instruments as well as the major Taiwanese foundries.
Novellus representatives stopped just short of confirming the design wins but noted they have already sold more than a dozen units, with deliveries set to start in December.
"We showed it to all of the biggest names in the industry," said Novellus vice president Ken MacWilliams. "Everyone who has seen one wants one, and we're working with all of them."
The next task for Novellus will be to try to take the approach it used with Vector to cut costs on other tools. The most logical candidate would be a tool that deposits the metal tungsten onto the chip.
"It's very similar," MacWilliams said.
FitzGerald said the Vector poses the biggest threat to Applied Materials and Mattson Technology, both of which already make tools for laying down insulator.
"You can bet Applied is going to come out with something," he said.
In general, FitzGerald estimated there will be plenty of business to go around, at least for the next six months.
"The next two to four months are the sweet spot of the cycle," FitzGerald said. New orders could start to slow early next year, he said, with the possibility that sales will begin declining sequentially by the second half of the year.