As lovers of gadgets, we are dependent upon the constant forward march of technology in the semiconductor industry. During the 15 years I spent working in that industry, I saw the price of a single tool to expose circuit patterns at the beginning of the process rise from ~$500,000 to ~40,000,000. Many of these systems are required in every wafer fab, and it is only one of many multi-million dollar tool required as part of the advanced semiconductor production process.

In case that is too vague – it is extraordinarily expensive to make the leading edge semiconductor products we all depend on.

Just how expensive? In 1970 it would cost ~$6 million to build and outfit a wafer fab, which rose to ~$3 billion by ~2000-2001, when the first 300mm (12 inch) wafer fabrication facilities were produced, and continued to rise to ~$10 billion by 2007 and planning estimates put the cost for a fab built in 2010 at ~$18 billion.

Who the heck can afford THAT?

As it turns out, very few companies – and that is bad for all of us in the long run. The following picture shows the semiconductor companies with R&D budgets in excess of $1 billion annually for the past several years.

Note: those numbers are for what folks are spending on development,. not necessarily building new facilities. But ultimately the ability to work under such a massive cost structure is critical to future success. And in an industry driven by competition creating exponentially improved products and constant downward price pressure, having very few companies able to sustain technology growth is a dangerous signal for the future.

Source: FabTech