Japanese equipment giant: Every chip on the planet passes through our equipment

Recently, the media theworldfolio interviewed Toshiki Kawai, President and CEO of Tel. During the interview, he said that "without TEL's technology, it would be impossible to manufacture the most advanced semiconductor chips."

The following is an excerpt from the interview:

Q: After dominating the semiconductor industry from the 1980s to the 1990s, Japanese manufacturers experienced a sharp decline in the 2000s as new entrants and technologies revolutionized the market. Today, despite incredible declines in fab capacity and chip production, Japan is still responsible for providing 40% of the world's semiconductor material consumption and 30% of the semiconductor production equipment. What is the role of the Japanese semiconductor industry today?

A: The world we live in faces many challenges. We have experienced significant disruption in recent years, most notably natural disasters caused by the COVID-19 pandemic, conflict in Ukraine, and severe environmental deregulation.

To define this turbulent period, there is an acronym: VUCA, which stands for Volatility, Uncertainty, Complexity and Ambiguity. To successfully navigate and transcend these turbulent times, businesses and organizations must identify and capture megatrends. To develop a resilient, strong and productive economy, new technologies and new ways of doing business are needed. As the transformation to a data-driven society accelerates and efforts to solve global environmental problems continue to advance, "digital × decarbonization" has become a global trend.

Semiconductor products are found everywhere; in our vehicles, electronic devices, factories and homes. Because of this ubiquity, the semiconductor industry plays a vital role in developing innovations that will enable our society to overcome this VUCA period.

Currently, the world is firmly advancing the implementation of ICT and DX and taking actions to realize a carbon-free society to build a strong and resilient society where economic activities will not stop under any circumstances.

I think the key approaches to these efforts are “digital green” and “digital green.” "Green by Digital" is realizing a green society by utilizing digital power such as cutting-edge ICT, and "Green of Digital" is promoting the reduction of energy consumption in digital infrastructure including data centers. Technology evolution in semiconductors is essential to enable both.

As the pace of digitization continues to accelerate, semiconductors will play a leading role as they will support and enable the creation of new applications. These novel applications will not be limited to specific sectors or geographies; rather, they will revolutionize the way we communicate, interact, and live our lives. Examples of these applications include virtual worlds, telemedicine, and new forms of mobility.

These new cross-industry applications will increase demand for semiconductor products. Therefore, innovation in the semiconductor industry necessarily involves the development of manufacturing technologies that allow the production of higher-capacity chips, each with higher speed, higher reliability, greater capacity and lower energy consumption.

As a global leader in the production of semiconductor manufacturing equipment and semiconductor materials, Japan will play an important role in turning innovative ideas into reality.

Q: In 2022, TSMC will begin building its first Japanese foundry in western Kumamoto Prefecture in a joint venture with Sony Semiconductor Solutions. Interestingly, this is the first time that TSMC has allowed a foreign company to take a large stake in its foundry. What makes the Japanese ecosystem an interesting choice for opening a new fab?

A: This is my personal opinion, but I believe this cooperation makes perfect sense because it allows Japan, Sony and TSMC to combine their respective strengths. Interestingly, these advantages are different but complementary.

Q: A typical fab produces approximately 2 million ICs per month and consumes approximately 20 million gallons of water and 100 megawatts of electricity per hour. As fab capacity increases, factories must find ways to reduce their environmental impact. How do your products and technologies help reduce the environmental impact of your fabs?

Answer: In order to reduce the environmental impact of semiconductor products, semiconductor equipment manufacturers need a variety of advanced technologies. After decades and decades of technological innovation, advancements in semiconductor products now come from technological breakthroughs in nanoscale patterning processes. The question then becomes: Who can provide a holistic solution to support the development of these new processes?

At TEL, we are the only company in the world that can provide solutions for the four key front-end processes of semiconductor production: deposition, coating/development, etching and cleaning.

TEL has equipment for all of these critical processes. What's more, every product in our lineup has the No. 1 or No. 2 market share in the world! When we talk about the next generation product, our EUV lithography coating machine/developer, our market share is 100%.

Virtually every semiconductor or display in the world passes through our semiconductor manufacturing facilities. In short, without TEL's technology, it would be impossible to manufacture state-of-the-art semiconductor chips.

2022 is the 60th anniversary of TEL. For this milestone, we announced a new corporate vision: a company full of dreams and energy that contributes to semiconductor technology innovation.

Renowned scholar and Harvard professor Michael Porter once argued for the need to create and adhere to a "shared set of values"; values ​​that are accepted globally. In laying out his vision, he believed that creating "shared values" that all people agree on is the key to human progress.

TEL's new vision is based on the idea of ​​creating shared value: CSV is the concept of creating social and economic value by leveraging corporate expertise to solve social problems, thereby increasing corporate value and achieving sustainable growth. We will continue to develop our business activities based on the concept of TSV: TEL's shared value, which is to contribute to technological innovation in semiconductors.

Q: Two weeks ago, IBM announced the development of a new method of vertically stacking silicon wafers; a method co-developed with TEL. Traditionally, 3D stacking has only been used for high-end operations such as high-bandwidth memory (HBM). This is the first time that 3D stacking can be performed on 300mm silicon wafers. How long have you been working on that project?

A: We are proud to lead the semiconductor equipment manufacturing industry globally. As a leading company, building strong partnerships with other global giants in the industry is not only a priority, it is deeply engraved in our corporate DNA.

As an equipment manufacturer, TEL does not directly produce semiconductor devices. Therefore, it is crucial for us to partner with a global leader in equipment manufacturing. For four generations, TEL has been developing roadmaps with corporate and research partners, seeking to help device manufacturers push the boundaries of semiconductor technology.

Q: On June 9, 2022, you were quoted in an article in Nikkei Asia, where you explained that TEL will continue to produce its products domestically. Interestingly, this is happening at a time when chip production is becoming more international, with new foundries opening on every continent. What are the benefits of keeping production domestic?

A: Keeping our manufacturing, R&D and design base nearby plays a critical role in our ability to innovate and maintain a world-class workforce.

By keeping our development and manufacturing teams closely connected, we are able to emphasize "concurrent engineering," where product development and mass production run in parallel and are ideally located near each other.

This geographical proximity enables us to integrate ideas from design, quality control and mass production during the development phase, allowing us to react quickly to new ideas and maintain technological leadership.

The semiconductor industry deals with critical technologies, so protecting trade secrets and data leaks is critical. By concentrating manufacturing and supply in Japan, we have also improved the level of technical information security.

Additionally, our Concurrent Engineering model creates a work environment where employees feel higher morale and a greater sense of responsibility, motivation and leadership, which in turn creates a sense of pride in producing the best products , thereby achieving a highly efficient working environment. Our team is proud of their work and inspired by the equipment they build. This means employee turnover is extremely low. In Japan, our employee turnover rate is less than 1%.

Our low turnover rate enhances our ability to handle critical information securely, and we encourage many of our customers to trust us because of this unusually low turnover rate. Our ability to retain competent employees is one of our greatest competitive advantages, especially compared to our European or U.S. peers. The loyalty and commitment of our engineers plays an important role in ensuring the security of technical information and is why our customers trust us.

TEL is also transparent with its suppliers, sharing production information and plans. This combination between geographical proximity and transparency has led to several of our suppliers opening their own production sites around our facilities, which further increases the reliability and resilience of our sourcing strategy.

If you visit one of our factories in Japan, where development and manufacturing are done in the same location, you will find that many of our suppliers have offices and factories close to us, creating a closely connected ecosystem.

In light of the logistics disruption caused by the COVID-19 pandemic and repeated supply shortages, we are now better equipped than ever to communicate effectively with every player involved in the supply chain, which is another advantage for us.