Navigating the semiconductor industry can be a challenge, especially for aspiring Deep Tech founders, from understanding complex manufacturing processes to managing intricate supply chains.
So, to decode the path from lab to market, I had the pleasure of hosting Robert Ashcraft, Investment Director at Samsung Ventures.
We delve into the key factors shaping the future of chip design and manufacturing, spotlighting the high costs associated with semiconductor fabrication, framing the challenges startups face transitioning from academia to industry, and providing strategies for effective corporate engagement.
Key Themes Covered:
⚡️Approaching the Semiconductor Supply Chain
🚧 Framing 2 Key Challenges in Semiconductor Manufacturing
🔬 Moving Semiconductor Technology from Lab to Market
🤝 3 Strategies for Navigating Corporate Engagement in the Semiconductor Industry
🎯 3 Key Topics to Discuss with Potential Corporate Partners
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KEY INSIGHTS FROM THE EPISODE
⚡️Approaching the Semiconductor Supply Chain
Semiconductor manufacturing begins with a silicon wafer.
The process involves numerous steps and extensive back-end support to transform the wafer into a functional product that can be used in computers, GPUs, or other advanced computing devices that are capturing widespread interest today.
Understanding the Cost of Semiconductor Manufacturing
One crucial aspect to grasp about the semiconductor industry, especially concerning high-end, state-of-the-art production, is the significant cost involved. Recent global movements have emphasized the strategic importance of onshoring semiconductor manufacturing.
In the United States, for example, there's a strong push toward domestic production. Similarly, Europe and countries like South Korea, are keen on maintaining their semiconductor manufacturing capabilities. Setting up a state-of-the-art semiconductor fabrication facility can cost around $20 billion, which is a staggering investment even for well-established companies.
The high costs are attributed to several factors.
These facilities are highly automated and complex, requiring extremely precise manufacturing processes. To produce 300mm wafers with consistently reproducible features as small as 15 to 20 nanometers across more than a hundred process steps, manufacturers need specialized and costly equipment. For instance, an extreme UV (EUV) lithography tool is essential but expensive, and it is crucial for producing cutting-edge chips.
Furthermore, the semiconductor manufacturing process involves various specialized materials. Key materials used, particularly in the patterning processes, include photoresists and other chemicals used alongside an EUV lithography tool to create the fine patterns necessary for modern chips. The purity of these materials is imperative to prevent contamination and ensure high-quality outputs. Other critical materials include substances that help flatten the wafer between steps, enhancing the overall process.
🚧 Framing 2 Key Challenges in Semiconductor Manufacturing
In the rapidly evolving semiconductor industry, there are 2 interesting areas that are shaping the future of chip design and manufacturing: advanced packaging technologies and EUV lithography. As chip manufacturers push the boundaries of performance, both of these trends are critical to overcoming the limitations of traditional approaches and enabling next-generation innovations.
The Rise of Advanced Packaging in Semiconductors
A key trend that has gained prominence in recent years, and is likely to become even more critical in the future, is the evolution of advanced packaging technologies in semiconductor manufacturing. Once a chip is fabricated on a wafer, the typical next step involves dicing the chip and enclosing it within a package. This packaging is crucial as it allows the chip to effectively communicate with other components.
Lately, the focus has shifted towards developing more complex packaging solutions. This innovation allows for greater computational power and memory to be integrated more closely. Such advancements are particularly significant in fields like artificial intelligence, which demand higher memory bandwidths and superior performance. The traditional layout, where the CPU and memory banks are distinctly separate, is becoming increasingly obsolete.
The drive towards sophisticated packaging underlines the need for specialized technologies that enhance the capabilities of state-of-the-art semiconductors. Future developments may even incorporate cutting-edge technologies such as photonic interconnects, further pushing the boundaries of what's possible in semiconductor design.
EUV Lithography: A Critical Tech Bottleneck
EUV (extreme ultraviolet) lithography stands as a significant technological bottleneck in the semiconductor industry. Essential for creating the fine features of modern chips, this technology is dominated by a single supplier, leading to unique challenges.
The exclusivity and technological sophistication of EUV tools have resulted in a supply-demand imbalance that significantly affects cost.
Acquiring an EUV tool involves substantial wait times and meticulous planning, reflecting the complex logistics and high demand pivotal to this technology.
Opportunities for Innovation
EUV technology is crucial not only for today's semiconductor manufacturing but also plays a key role in advancing next-generation technologies like high numerical aperture (NA) systems.
These innovations are vital for the continued miniaturization of semiconductor devices, allowing for even smaller feature sizes.
The field also sees potential in developing new photoresists used with EUV tools. The chemical properties of these photoresists and their interaction with EUV photons greatly influence the effectiveness of the patterning process. For example, a photoresist that improves line edge roughness and precision could enable an EUV tool to achieve even finer feature sizes.
Challenges for Startups and Academics
While these innovations may sometimes be initiated by academics or smaller startups lacking the resources to develop full-scale EUV tools, they can still make significant contributions with specialized materials like photoresist chemistries. However, accessing the necessary tools to test these innovations on an appropriate scale poses a considerable challenge. The process of proving new concepts and persuading a risk-averse industry to adopt these innovations is often lengthy and complex.
🔬 Moving Semiconductor Technology from Lab to Market
Entering the semiconductor industry presents significant challenges, but the strategic use of resources and support from bridging entities and venture capital can provide startups with the crucial backing they need to navigate this complex landscape.
The recent governmental support, such as the CHIPS Act in the US, aims to enhance domestic supply chains and bolster R&D, potentially easing the transition from academia to industry.
This support could increase funding for proof of concept (POC) projects, facilitating collaboration between academia and the semiconductor industry.
Entities like the Semiconductor Research Corporation in the US play crucial roles in fostering these connections, either through research collaboration or licensing.
However, from a venture capital perspective, investing in the semiconductor value chain remains a formidable challenge. Despite this, we've seen significant innovation, particularly in AI computing from startups exploring new computing modalities and architectures.
The industry continues to evolve with companies demonstrating annual improvements in GPU design and performance. If a startup develops a compelling product, such as a photoresist that enhances feature definition and reduces feature size, it has a better chance of being adopted within the industry.
The challenge often lies in convincing internal business units to take the initial risk of engagement. Bridging organizations such as national labs or government-funded entities can help overcome these hurdles by providing the necessary connections between research and commercialization.
Furthermore, venture arms play a pivotal role in facilitating these connections, offering startups a platform to demonstrate their technologies and potentially receive valuable feedback. This feedback can guide startups on necessary improvements or adaptations to align more closely with industry standards.
🤝 3 Strategies for Navigating Corporate Engagement in the Semiconductor Industry
For those immersed in academic or national laboratories, leveraging the entrepreneurship and corporate relations capabilities of these institutions can be extremely advantageous.
Here are 3 main approaches for founders to effectively navigate these crucial relationships:
With large companies, initiating contact can often be daunting due to their extensive size and complex organizational structures. It may be beneficial to forge connections with investors who are receptive to establishing relationships that could become instrumental later on, even if initial investment opportunities such as angel or seed funding may not be immediately available.
Many large corporations maintain open innovation groups. These groups engage deeply in academic collaborations and are continuously on the lookout for emerging technologies. While interacting through these channels does not ensure direct engagement with the business units that will ultimately utilize the technology, they represent an essential first step in obtaining valuable feedback and establishing pivotal connections.
Furthermore, tapping into connections offered by U.S. government programs, such as those from the Department of Energy or the Department of Commerce, can prove invaluable. These agencies are often able to facilitate introductions to key industry stakeholders.
In conclusion, if you believe your technology holds promise, it is prudent to engage with as many individuals and groups as possible to maximize your exposure and enhance your opportunities for collaboration.
🎯 3 Key Topics to Discuss with Potential Corporate Partners
When preparing for discussions with potential corporate partners, it's crucial to evaluate how your innovation advances the current state of the art, estimate the commercialization timeline, and address potential risks and costs.
Here are 3 key points to discuss:
The first critical question to ask is: How do I'm proposing improve upon the current state of the art? This can be challenging as you may not always have a clear picture here, but it's important to estimate how much improvement your innovation could bring and what the commercialization timeline looks like.
“How is what I'm trying to do improving on the state of the art? […] That can be a little bit challenging because you may not always know what state of the art is, but in your best estimate, you know, how much is this going to improve whatever I'm trying to improve? And what's the timeline for when this could be commercial? Because you have to realize that you're not competing with today's technology. You're competing with where today's technology is going to be when you're commercialized.”
Another consideration is the risk to the business. Businesses, particularly in the semiconductor industry, are generally risk-averse. They might personally appreciate the novelty and potential of new technology, but when it comes to implementation, the technology must present relatively low risk. This is assessed through various proof of concept (POC) studies and due diligence processes within the business units. Address potential risks related to safety, environmental impact, or unforeseen effects on other processes. Having answers to these concerns is crucial, even if they are not immediately available.
Cost is always a significant factor, especially in industries like semiconductors where there is some insensitivity to costs due to the high value of outcomes. It's vital to understand the value your technology might add in comparison to its cost. The materials used in semiconductors need to be of very high purity, quality, or specialization, often resulting in high costs.
