Semiconductor Foundry Service Supply Chain - TSMC...

TSMC

Dec. 2005 P. 1

ConfidentialSecurity C

Edwin Liou

Business Process Integration Division, TSMC

Semiconductor Foundry Service Supply Chain - TSMC Experience

TSMC

Dec. 2005 P. 2

ConfidentialSecurity COutline

Foundry and Semiconductor Industry

TSMC’s position

Challenge of Foundry SCM

TSMC ESCM Program introduction

Experience- Key Successful Factors

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Dec. 2005 P. 3


Disintegration of the Semiconductor Supply Chain

IDM/ASIC

Before 1986

Fab

Assembly & Test

System/IC Design

System Design

IC Design

Foundry

ContractAssembly

& Test

IDM/ASICFabless Co.

1990s

Assembly & Test

Fab

System Design

IC Design

System Design

IC Design

Fab

Assembly & Test Assembly

& Test

IPIC

DesignIC

Design

IDM/ASIC Fabless Co. System Co.

After 2000

SystemDesign

System Design

Foundry

DesignServices

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Dec. 2005 P. 4


Foundry Growth Forecast

Foundry Sales $B

2003-2010 CAGRWW IC = 9%Foundry = 11%

Foundry Contribution Rate in IC MKT

Source: IC insights, WSTS, TSMC

0%

5%

10%

15%

20%

25%

30%

1993 1995 1997 1999 2001 2003 2005 2007 20090

Con

trib

utio

n R

ate

B U

S$

5

10

15

20

25

30

35

11% 11% 10% 11% 10%12%

16%

20% 19%

23%

28%

23% 24%

20101994 1996 1998 2000 2002 2004 2006 2008

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TSMC’s position




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Dec. 2005 P. 6


TSMC is the creator and leader of the foundry industryWe are committed to excellence in technology, manufacturing and serviceFounded in 1987

“Our vision is to be the most advanced, innovative and largest provider of foundry services, and in partnership with our customers, to forge a most powerful force in the semiconductor industry.

To realize our vision, we must be:

(1) a technology leader, competitive with industry leaders(2) the manufacturing leader(3) the most reputable and service-oriented; and the greatest total-benefits provider.”

Dr. Morris ChangChairman

Taiwan SemiconductorManufacturing Company, Ltd.

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Dec. 2005 P. 7


TSMC Market Share

Worldwide Dedicated Foundry Industry by Revenue

Source: TSMC Market Research Program estimates. Company Reports, IC Insights.

UMC 18.0%

TSMC 50.1%

CSM 7.4%

Other 17.3%

3Q05$4.3 Billion

3Q05$4.3 Billion

SMIC 7.2%

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ConfidentialSecurity CSales Breakdown by Technology

1Q04 2Q04 3Q04 4Q040%

25%

50%

75%

100 %

1Q05 2Q05

0.11/0.13μm

0.15/0.18μm

0.25/ 0.35μm

0.50μm+

90nm

3Q05

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Dec. 2005 P. 9

ConfidentialSecurity CSales Breakdown by Application

0%

25%

50%

75%

100%

Computer

Comm.

Consumer

Memory

Others

1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05

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Dec. 2005 P. 10

ConfidentialSecurity CSales Breakdown by Geography

NA

Asia

Europe

Japan

0%

25%

50%

75%

100%

1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05

Note: This chart does not reflect the actual shipment destination of sales.

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ConfidentialSecurity CSales Breakdown by Customer

0%

25%

50%

75%

100%

Fabless

IDM

1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05

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TSMC’s position




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Characteristics of Foundry – Logistic view

Diversified customer products & manufacturing processes

Various business models – die buy, wafer buy, Turnkey

Challenging conditions for high-end / new processes

Frequent and versatile customer demand/order changes

Almost strictly Make-to-Order

Sophisticated allocation and capacity planning processes to balance customer needs and TSMC interest

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Example of Planning Complexity (Order Change)

Disruptionto Planning-

•Capacity•Demand Quantity

•Demand Priority

Pull in/ Push Out7

8 Priority Change

Split 5

6 Cancel

Product Change3

4 Service Flow Change

Hold/ Future Hold1

2 Release

Order v.s. WIP Synchronization

A B C D

O1L1

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ConfidentialSecurity CChallenge of Foundry SCM

How to effectively manage the complexity anduncertainty to plan expensive and long lead time capacity to meet customer needs in performance, quality, delivery, cost and service.

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TSMC’s position




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ConfidentialSecurity CTSMC ESCM Program

ObjectivesTo provide TSMC customers best services in production and logistics at competitive cost

DeliverablesTotal customer-oriented internal planning and execution business processesIntegrated Supply Chain Management System Solutions (changed from disintegrated IT systems to an integrated platform)

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2001JAN Pilot Study Group

Formed

SEP Development Start

200211/01 ESCM DP Go-Live

200308/18 ESCM Pilot Run

12/29 Revised Order Fulfillment Solution Released

200406/01 Semi-Auto MPS Solution

Go-Live

08/01 Full-Auto MPS SolutionGo-Live

TSMC ESCM Milestone

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Dec. 2005 P. 19


ESCM Architecture and Key ProcessesCustomers ESCM Customer

Interfacing (real-time)ESCM Planning

(batch run)

WOD

Actual Delivery

DemandForecast

PurchaseOrder

AllocationPlanning

DemandPlanning

CapacityModeling

PO entryand change

ATPDelivery Confirmation

ATP Request/Consumption

NSD

CASDSupport

Commitment

AllocationManage-ment

Support plan

JudgedDemandForecast

CapacityPlan

OrderManagement

OutputPlanningATP

ATP Plan

CapacityPlan

AdjustedCASD

Manufacturing

Planning

MPSConsumedATP

Remark: CASD: Capacity Allocated Supported DemandATP: Available To PromiseNSD: Non-Supported DemandMPS: Master Production ScheduleWOD: Wafer Out Date

Lot HandlingSystem

Order Change

Lot hold /Release/New part

Lot hold /Release/New part

Demand-to-Support

Order-to-Confirm

Order-to-Ship

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Dec. 2005 P. 20


The key capability provided by Demand-to-Support ProcessBuild “Capacity Statement” to support unified PDM for win-win demand collaboration with customers.Provide machine hour level Demand-Supply netting for allocation plan.

The expected benefits from Demand-to-Support ProcessCustomer will have visibility of long term capacity support plan for new product design and commercialization.Shorter cycle time to acknowledge capacity support adjustment against customer’s demand forecast changes.TSMC internal long term capacity investment plan aligned with customers’ future demand forecast.

DemandForecast

AllocationPlanning

DemandPlanningDemandPlanning

Support Commitment

Support Commitment

Support plan

Support plan

JudgedDemandJudged

DemandForecastForecast

Demand-to-Support

Demand-to-Support Process

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Dec. 2005 P. 21


The key capability provided by Order-to-Confirm ProcessRobust order fulfillment engine to provide fast and accurate order delivery confirmation aligned with forecasts.Swapping capabilities are also built in so as to accommodate minor deviation and speed up confirmation cycle time

The expected benefits from Order-to-Confirm ProcessShorter cycle time for customer to have delivery confirmation both new purchase order or order changesFlexible swapping mechanism to reduce the work load of placing different products than planned.

PurchaseOrder

PO entryand change

PO entryand change

Delivery Confirmation


OrderManagement

OrderManagement

Order-to-Confirm

Order-to-Confirm Process

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The key capability provided by Order-to-Ship ProcessProviding the visibility of delivery prediction to all WIPsand F/G though tight peg between order and WIP relationships.Once delivery date or volume changes requested, a simulation capability built in to response customer fats.

The expected benefits from Order-to-Ship ProcessCustomer can plan well for downstream operation with their sub-con vendors (either CP or assembly, final testing, etc.) based on high DSA (Delivery Schedule Accuracy).Flexible and high confident level of rescheduled delivery confirmation when order changes requested.

WODWOD

Actual DeliveryActual Delivery

PurchaseOrder

PO entryand change

PO entryand change

ATPATPDelivery Confirmation




OrderManagement

OrderManagement

OutputPlanningATP

ATP PlanATP Plan

Manufacturing

Planning

MPSMPS

Order-to-Ship

Order-to-Ship Process

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Dec. 2005 P. 23


Manufacturing is inflexible and switching production among models and brands are slow and costly; Production schedule is established remote from shop floor; Manufacturing requires constant production volumes

Flexibility

Manufacturing produces own schedules and plans materials with the goal of asset utilization and low changeover costs

Planning & Scheduling

Manufacturing integrates planning and schedules with Logistics, Sales, Marketing and Finance, focused on customer service and total landed costs

Manufacturing integrates planning and scheduling with entire supply chain including both internal and external suppliers and customers to coordinate plans and execution

Areas Basic Developing World Class

Manufacturing is flexible and can quickly switch production among models and brands, but requires constant, typically large, production volumes

Manufacturing is flexible and can quickly switch among models and brands, and scheduling is dynamic on the shop floor to react to quick changes, allowing for variations in volume

The order tracking system is automated and visible throughout the organization, but not to the customers; backorders are prioritized based on pre-set criteria and tracked automatically

Order Tracking The order tracking system is manual and inaccessible to customers. Backorders are tracked manually

Order tracking system is automated and visible throughout the organization and to customers; shortfall in supply is forecasted and proactively managed to meet customer needs (i.e., ATP, Allocation)

TSMC is on the way to be World Class

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TSMC’s position




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ConfidentialSecurity CImplement Experience Sharing

Team Commitment BPR first then system solution Robust and clean data (with extensive data cleansing effort)Phased release to build up confidenceComprehensive testing to cover the complex conditionsSeamless cooperation between Business and ITPlanning Algorithm is “NOT that big of a deal”; It is how you implement it that matters

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Dec. 2005 P. 26


Team Commitment

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Dec. 2005 P. 27


Q & A

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