In 2022, we spoke with Peter Suliga, Director of Eastern Sales for HEIDENHAIN CORPORATION, about the state of the semiconductor industry and its supply chain. Recently we checked in again to inquire about the industry, learn about the latest challenges in semiconductor manufacturing—and see how our offerings help clients overcome them. Here are some excerpts from that conversation.
How would you describe the current status of the semiconductor industry?
At the beginning of the COVID-19 pandemic, people were concerned about stopping shipments and stopping production lines. It was good practice to have more product on hand than you needed. Now it’s the opposite. Factories are still open and operating, but they have a lot of inventory that they need to sell through. They have orders, but their customers don’t need products as quickly—or they already have enough products on their shelves.
Are there any exceptions to the oversupply issue?
One major exception is AI. Demand for AI applications is significant. Consider ChatGPT, which acquired 100 million users in less than two months. It took Facebook five years to reach that amount. Accordingly, demand for AI is expected to grow—some firms project that revenue will reach over $119 billion by 2027. In response, some companies are building chips specifically used in AI. But still, phones, tablets and PCs account for the bulk of the chips that are consumed. The AI market segment is rapidly growing.
Are chips for AI more challenging to produce than conventional chips?
There’s nothing fundamentally different in how they make chips for AI. But they are complex. Some GPUs, for example, have almost 100 billion transistors. Achieving high yields when manufacturing such complex products requires an ever-increasing number of defect inspection and metrology steps. The inspection and metrology equipment in turn needs to be cost effective, which drives the need for higher throughput and accuracy. MULTI-DOF encoder solutions from HEIDENHAIN enable capital equipment to maintain high accuracy while maximizing throughput.
To make a functioning chip with billions of transistors you have to achieve transistor failure rates measured in parts per billion. It must be close to perfection, yet cost-effective. As chips get more complex, yields become more critical. You’re producing fewer chips per wafer. For small devices, you can have 10,000+ of them on a wafer, but with more advanced chips, maybe you have 20. You can’t really afford to scrap half of it.
Keep in mind, though, that the bulk of the chips in your smartphone are not this advanced. They are made on legacy nodes, which are still sufficient for many applications. For example, consider smart lightbulbs. They don’t require the latest technology to function; they require something that was powering your computer 10 years ago. The old fabs aren’t getting closed and retooled to the latest nodes because the latest nodes require building a new facility from the ground up.
Automotive applications are the same way. Most don’t require the latest and greatest, outside the latest GPUs powering self-driving functionality, but they do require reliability. Consider the amount of cars produced in 2021 and the amount of chips those cars used. According to the New York Times, the average 2021 model contained 3,000 chips. And according to the Bureau of Transportation, domestic automakers produced over 9 million cars that year. That’s nearly 25,000 cars per day. Even a chip failure rate at the parts per million level could cause serious reliability issues for thousands of cars per month. And as cars add more chips, some automotive system suppliers are now asking for semiconductor quality at the parts per billion level.
This is where we also step in. Our components help customers build advanced tools, perform delicate work and maintain accuracy. They can take exact measurements and maintain total control, all at very high speeds. That leads to higher yields, fewer defects and more reliability overall.
What about your clients, are their needs shifting?
Our clients make capital equipment for manufacturers; as manufacturers move toward more advanced packaging, that creates new demands for their equipment. Consider “chip to wafer” packaging. As individual chips are attached directly onto individual wafers, rather than mounted on the interposer, one can further optimize performance and cost of the full package.
Consider this example: one manufacturer recently announced its 2 nanometer process. A chip made using this process could fit 50 billion transistors on your fingernail. Working at that size requires extremely high accuracy on a scale much smaller than traditional packaging. We provide our clients with the tools they need to drive that accuracy.
How does HEIDENHAIN help maintain that level of precision?
We have MULTI-DOF technology, which measures up to six degrees of freedom. Imagine trying to perfectly align two playing cards. That’s not just X-Y-Z alignment. It’s also pitch roll yaw. You have to control all that to align those cards. That’s why you need MULTI-DOF.
In order to make those machines the most cost-efficient, you need just enough performance at the right price—and a great amount of flexibility to customize it. That’s where brands like RSF and Numerik Jena—or solutions like the HEIDENHAIN EnDat 3—come in. They offer solutions that can serve 80% of applications, more efficiently than some high-end solutions. That’s how we support the industry.
So you can accommodate a lot of different customers?
What we bring to the table is, the breadth of products that span entry-, mid- and high-level applications, with products tailored for industries, from the standpoint of price-to-performance ratio and customizability. We also respond to requests more quickly and deliver orders faster. For example, with a brand like RSF, we can create customized solutions and provide samples within weeks. We can print graduations directly on customer parts, to make machines smaller—to reduce the time it takes to assemble the machine. So it’s much more compact, it’s faster and it eliminates steps in manufacturing.
What would you say makes HEIDENHAIN so well-equipped to help clients overcome these challenges?
We have combinations of brands that do lots of things. For example: Numerik Jena. If you’re trying to fit a lot of electronics in a small space, they provide some of the smallest encoder packages in the world. On top of that, they can also make one-of-a-kind solutions that are used by top players in the semiconductor market. Then, we have companies like ETEL that provide highly integrated motion system solutions with capabilities that are truly unique in the world.
We make our own motors, our own electronics and our own encoders. And we’re extremely skilled in building those highly complex mechanical assemblies; ETEL can provide the frame, isolation system, electronics, motion systems, so the only thing you worry about is your apparatus on the application plate. We take that ownership. You don’t have to have mechatronic experts. We have that covered. We’re the only technology leader that has that level of integration of technical competence.
Our customers want to focus on their key competencies and focus their time and effort on the highest-value problems and unique technologies. Not motion control. That’s something companies like HEIDENHAIN, ETEL, RSF and Numerik Jena can do much more effectively.