A category profile of spending for semicondutor device producers. Usefull for Purchasing, Sales and general benchmarking

1. Semiconductor
Device Company
Purchasing Profile
Bill Kohnen
A general model for a
midrange company in size
and technology

2. General Comments
 Total purchase spend for semiconductor
producers is over 50% of revenue
 Companies with Fabs of course spend more
directly on front end capital and materials
than fab lite or fabless companies.
 Focus of Purchasing may vary at Fab v.
fabless but costs still impact with any model
 Labor portion of front and back end NOT
addressed specifically

3. Broad Categories
Category
27%
Front End
Backend
53%
Indirect
20%

4. What Makes Up Front End
New Equipment
3%
9%
Silicon
8%
Chemical and gas
10%
Photomask
59%
11% Quartzware
Equipment Spares and
Maintenance

5. Comment on Front End
 New equipment of course varies depending on
semiconductor business cycle and need for
additional capacity
 Technology and new process equipment
generally make up 10% to 20% of equipment
spend
 Silicon, Chemicals, gas and Quartzware are driven
by utilization but at a baseline level of operations
the absolute spend drops at a max of 50%.
 Photomask spend can be a leading indicator of
growth although there is also some baseline level
of replacement and repair spending

6. What Makes Up Backend
Column1
6% 4%
Equipment
7% Direct materials
39% Test and Burn In Boards
9%
Kits, Contactors
12% Trays, Tubes,Tape,Film
Spares
Shipping Materials
23%

7. Comment on Backend
 Equipment needs more volatile
 Materials overall also subject to baseline
levels but variation also driven by various
package types – not seen in front end
 Tubes, tray, Film depends on product and
customer demand
 Spares can be higher if older machines
used
 Shipping supplies demand driven

8. Front end vs. Backend
Item Front End Back End
Equipment Less Competition More opportunity
Used and for savings.
refurbished market Negotiations, taking
opportunities excess FG, Lots of
Generally build to demo, competitive
order. High level bidding
technology driven
sales and decision
process
Materials Unless self imposed Can be limited
spec there is more competition based
competition on low volume for
between suppliers materials and
package tapes

9. Front end vs. Backend
Item Front End Back End
Equipment Spares In downturn more More variety in
and Maintenance likely to be reduced backend and older
as systems idled. systems generally
Still in some cases creates more
tech support inventory and
outsourced complexity.
Constraints on
service frequent.
Shipping and Clean room Very competitive
Handling items requirements tens to with multiple
drive costs although suppliers. Some
more competition in total cost benefit
this space benefit for local
support

10. What Makes up indirect
7% Healthcare
8% 24% Facilities
10% IT
Consulting
12% Marketing
22% General Admin
17% Travel

11. Comment on Indirect Spend
 Indirect spend includes more specific
categories
 The spend is not typically centralized
 Company culture has greater impact
 Often focus of indirect spend is on
efficiency
 Semiconductor industry has not derived
savings other industries have in this area

12. Adjustments
 Model is for a mid sized mid range
technology company in normal growth
part of cycle
 For high end process technology and
volume equipment may be adjusted
higher (Microprocessor, Memory)
 For mature lower end technology lower
equipment portion (Discrete, Some
Analog)