Deposition and etch markets for copper interconnections dominated by few players

Dr. Robert N. Castellano, The Information Network

NEW TRIPOLI, USA: The long awaited transition to copper interconnects for memory devices skyrocketed in 2009, and will impact nearly every sector of the semiconductor equipment market into 2011, according to our report 300mm/Copper/Low-K Convergence: Timing, Trends, Issues, Market Analysis.

While the overall semiconductor equipment market decreased more than 40 percent in 2009, equipment directly tied to the copper interconnect part of semiconductor manufacturing decreased only 8.7 percent.

In late 2006. Micron Technology became the first DRAM vendor to produce commodity DRAM with copper, rather than traditional aluminum, interconnect. Elpida followed a year later. The adoption of copper in memory devices is currently under way, and all memory suppliers, led by Samsung, spent huge sums of money upgrading as many of their lines as they could to copper and this change had an important impact on purchases of copper deposition equipment and materials in 2009.

The impact of this transition on processing equipment was most obvious in equipment used with traditional aluminum interconnects. For example, the high-density plasma CVD sector (HDPCVD), which is used for depositing dielectric films saw revenues drop 72 percent in 2009. The Metal Etch equipment revenues registered a similar drop. On the other hand, equipment used for copper interconnects exploded in 2009.

Copper is deposited by electrochemical methods, far different from the vacuum-based methods to deposit aluminum interconnections. Novellus (NVLS) has dominated the market since 2002, and in 2009 held an amazing 85.6 percent market share.

Electrochemical Deposition Market SharesSource: The Information Network

Applied Materials (AMAT) which has been in the market since 1999, acquired Semitool in late 2009, mainly in an effort to get into the back-end packaging and nascent three-dimensional integrated circuit (3-D IC) business.

Now we hear that Lam Research (LRCX) is set to enter the copper deposition, according to Jagadish Iyer, an analyst with Arete Research LLC (New York). I ask myself why?

Some years ago, I was asked by Lam to give a keynote presentation at their annual meeting in Taiwan for their customers. I remarked to Lam executives that I felt they needed to get into other market sectors as they were only a plasma etch company. The comments I received were that they “wanted to do one thing and do it best”. Fair enough!

According to data in our report Plasma Etching: Market Analysis and Strategic Issues, Lam had a 41 percent share of the $1.9 billion plasma etch business in 2009, competing with AMAT, Tokyo Electron, and Hitachi. Tokyo Electron was a distant second with a 28 percent share in the overall business.

In the dielectric plasma etch sector (the other two sectors are metal etch and polysilicon etch and Lam led both sectors in 2009), the primary method etching grooves in the silicon dioxide for copper interconnect technology, Tokyo Electron led in 2009 with a 46 percent share, ahead of LRCX with a 34 percent share.

A short time after my discussions with Lam, the company Lam initiated an “Adjacent-market growth strategy.” Their acquisition of SEZ in 2008 in the single wafer clean business has paid off handsomely. Around the same time, Lam acquired the copper deposition technology from KLA-Tencor (KLAC) when it divested its position in its deposition effort, Blue29 LLC in 2006.

However, with a market dominated by Novellus on the front-end copper interconnect business and Applied Materials with a 70 percent share and Nexx Systems with a 25 percent share of the back-end packaging business, I don’t understand Lam’s strategy.