“Challenges that need addressing in 2.5D / 3D IC are supply-chain related. The current cost structure for 2.5D / 3D is leveraged by materials and processing equipment.” (Overheard at the GSA Silicon Summit 2013, April 2013.)
Supply chain complexity and cost: it seems to be the theme common to current discussions about implementing 3D IC technology in high-volume manufacturing today.
Consider this: the end-to-end 3D IC business model TSMC proposed in late 2011 has yielded to a new approach in 2013. TSMC is now expanding its service direction to include collaboration with customers in designing a 3D IC supply chain model that may or may not integrate OSATS, at the customer’s discretion.
It sounds more complex, adding links to the 3D IC supply chain, but could TSMC be making this change with an eye toward lowering costs, and hoping thereby to encourage 3D IC time-to-volume?
Or is it that TSMC has an eye on the competition? After all, GLOBALFOUNDRIES has stuck to its guns all along on 3D IC, reiterating its dedication to an open 3D supply chain collaboration that involves the logic foundry, memory foundry, OSAT and customer.
Either way, for 3D IC supply chains to work in concert, start to finish, link to link, reliably delivering quality products to the end customer, all parties involved in the chain need to be on-board and coordinated, despite each party having individual business objectives, and individual practical constraints, that may influence their individual levels of enthusiasm and appetite as supply chain participants.
That situation sounds like it could be messy.
Rather than wait for the definitive HBS 3D IC supply chain case study though, here at 3D InCites we decided to take on the topic ourselves.
What are the unifying elements that hold complex 3D IC supply chains together? The only element we can see that could ultimately unify the various companies and cultures in the 3D IC supply chain is … profit.
Unless the various individual elements of the 3D IC supply chain can each see reasonable business benefits to their continued participation, it would take only one ‘weak link’ dropping out for the entire supply chain to be compromised.
Next question: just how can disparate player companies in the 3D IC supply chain ensure that the business side of the equation makes sense for them?
To answer that, we decided to look at the available methods that might assist player companies to solidify their understanding of the business variables embedded in 3D IC supply chain participation.
And that’s what led us to Wright Williams & Kelly, Inc. (WWK). WWK has been involved with complex factory and supply chain modeling in the semiconductor industry for over 20 years, and seems a natural partner with whom to have a business of 3D IC supply chains conversation. 3D InCites sat down with Alan Levine, Director, WWK, to share his thoughts.
3D InCites: Tell us a little bit about WWK please Alan.
Alan: WWK is run on a very simple philosophy. We ask one basic question: what is the value in doing ‘this’? ‘This’ is whatever it is you are considering, including 3D ICs. The question may be simple, but getting the answer rarely is. We’ve developed applications that allow us to model businesses, factory flows, process step costing and so forth to help answer that basic question. At the end of the effort, by answering the value question, our customers have the type of information they need to make better business decisions.
3D InCites: How does this apply to the complex supply chains involved in the 3D IC business?
Alan: We recognized a long time ago that supply chains are only sustainable if everyone gets something out of it. We’ve designed our cost and value modeling tools to be able to operate over multiple factories. We’ve applied them to IC-based solutions like 3D ICs, but also in areas like solar, displays, LEDs, ink jet cartridges and so forth. WWK has always operated as a bridge between technology and business. A decision, no matter how much it appears to be technical in nature, is almost always a business decision. And we’ve developed the business processes and tools to support that. It just gets more complex when the decisions have lots of players with lots of moving parts.
3D InCites: Can you give us a little more color on that?
Alan: One of our first major supply chain projects was with a fabless IC company who wanted to look at their key supplier’s cost structure. In this case, the key supplier was a wafer fab. The two companies had a business agreement such that any cost improvements realized over time would be shared between them, but the fabless company was essentially operating blind in this area. They engaged us. From the work we did with both companies, we learned a tremendous amount about not just the obvious issues of managing costs and optimizing profits, but also about the practical constraints and human emotions that impact the ability to succeed in multi-party supply chains.
3D InCites: What about issues with the key supplier’s cooperation? How shy were they about revealing cost details to their customer?
Alan: Both companies were wary of the whole idea at first; the key supplier much more so. We had a brainstorming session where we laid out the benefits of this interaction, and it was apparent that the benefits overwhelmed the drawbacks. It took a little time to warm to it all, but both companies were very glad to implement this strategy. And they both increased their profits as a result.
3D InCites: If both companies increased their profits, are you suggesting that this wasn’t a zero sum game?
Alan: Exactly. We discovered, not surprisingly, that the two companies had different agendas. By better aligning their agendas, we were able to increase the amount of profit each company made. From that we developed the concept of ‘total available profit’. A lot of the ‘total available profit’ can disappear in a supply chain where agendas are not well aligned. We’ve found that many companies have a ‘silo mentality’, where they look after themselves only. But that means they aren’t really paying much attention to the other parts of the chain. Even though, as a chain, each link is dependent on the other. You need to look after yourself, but blind self-interest isn’t good – self-interest doesn’t necessarily lead to maximizing total available profit for the entire chain.
3D InCites: What do you mean by agendas being ‘aligned’?
Alan: Great question. Just because profit seems like the one thing everyone can agree on, it doesn’t mean everyone agrees on all the details of the agenda. You have the end use customer, you have the supply chain, you have the suppliers to the supply chain and so forth. There are a lot of people involved and not everyone will embrace change in the same way. Objectives for the supply chain need to be clear and consistent. You want to encourage innovation, encourage cooperation, and you want to get to scale in a big hurry. If you can align everyone under common business objectives, you are more likely to make that supply chain work than if it is just driven by technical requirements alone.
3D InCites: The foundry/fabless case sounds like a relatively simple case compared to the 3D IC supply chain.
Alan: Correct. But the core concepts we developed from that initial two-player engagement, and from others we’ve studied, have served us and our customers extremely well. In one case, we worked with a customer who needed a more reliable electronic system that they were putting together and delivering. The finished system was very expensive. The key part of the reliability solution was in the wafer fab, however, which was very early in the supply chain. In order for the business side to work, the customer needed for the process to work at 6 different levels of the supply chain: wafer fab, sort, assembly, final test, board and sub-system. We were able to show how this solution made good business sense for each member of the supply chain. By doing the business analysis up front, the customer created a straightforward case for the needed investments by the members of the supply chain. You can imagine the hesitance that the key supplier of this technology had prior to the business analysis work we did with their supply chain. If any one supply chain element balked at it, the whole program was jeopardized.
3D InCites: Sounds like a great segue into Part 2 of our conversation Alan, which will be about just how this kind of analysis approach ports to the 3D IC supply chain.
Alan Levine has spent over 30 years working in high technology manufacturing, with an emphasis on manufacturing productivity. Alan has been with Wright Williams & Kelly, Inc. since 1995 and focuses on helping clients increase the value they receive from their complex operations. Previously, he held positions with Fairchild Semiconductor, KLA Instruments, and Ultratech Stepper. He holds a degree in Chemical Engineering from Cornell. Alan can be reached at 408-323-9780 or as email@example.com.
From Petaluma, CA, thanks for reading. ~ PFW