1967: Turnkey Equipment Suppliers Change Industry Dynamics

Third-party vendors develop specialized knowledge of semiconductor fabrication and emerge as vendors of process technology and turnkey manufacturing facilities.

During its first decade the semiconductor industry went through five basic transistor structures: point contact, grown junction, alloyed junction, surface barrier, and diffused-base. Manufacturers built their own equipment to support each generation. Jack Kilby (1958 Milestone) noted that "probably the most expensive piece of equipment that we used cost less than $10,000." As production moved to high volumes with the planar process (1959 Milestone), techniques were standardized across the industry and independent equipment producers emerged.

Vendors specialized in "Front End" (wafer processing) or "Back End" (package, assembly, and test) (1961 Milestone) operations. Front-end equipment prices increased by orders of magnitude as wafer diameters grew from 0.5 inches in 1958 to today's 12 inches (300mm). Early front-end tool suppliers include Thermco (diffusion furnaces) and its Japanese licensee Tokyo Electron Ltd, DW Industries (deposition systems), and GCA/Mann and Perkin Elmer (photolithography) (1955 Milestone). Electroglas, a 1961 Fairchild spinout, built probe equipment for wafer testing. In 1965 Kulicke & Soffa introduced commercial contact aligners. Varian Associates built evaporators, vacuum pumps, and ion-implantation systems.

Founded in 1967 to supply chemical vapor deposition systems for epitaxial films (1960 Milestone), Applied Materials initiated a change in industry dynamics by encouraging semiconductor vendors to shift responsibility for development of manufacturing technology to their equipment suppliers. Third-party sources of technology allowed the semiconductor companies to focus on product architecture and applications rather than process and manufacturing expertise. This led to the rise of "wafer-foundry" vendors who supported a new breed of "fabless" semiconductor companies in the 1980s.

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