The impact of tool delivery times on the optimal capacity and value of semiconductor wafer fabs

Abstract

The objective of this work is to provide insight into the sources and magnitude of the costs that result from lost market responsiveness due to long capacity lead times. A model has been developed to determine the impact of tool lead times on the expected present value of monolithic fabs and modular a fab over the fab lifetime. The model makes the following assumptions and approximations: Demand follows a random walk characterized by a known drift rate and volatility; Capacity lead times are known in advance longer capacity lead times result in tools being ordered earlier than tools with late lead times; Management has the option of sparsely populating a fab initially and then adding additional tools as needed. This is referred to as a modular fab. Cost parameters representing modern 200 mm wafer fabs are used. Based on the above assumptions optimal capacity expansion schedules are numerically generated. Initial results show that as capacity lead times get shorter, initial fab size is likely to be smaller and future capacity additions are likely to become more frequent. If capacity lead times are short, fab capacities can be more accurately matched to demand, achieving higher expected revenues. The increase in revenues can be used to evaluate the financial value of shorter capacity lead times.