Honeywell Wants to be Materials Giant

Electronic News, April 17, 2000 by Jeff Chappell

Honeywell Electronic Materials (HEM), the Silicon Valley subsidiary of Honeywell Inc., Morristown, N.J., has a slogan: "From Layer One to Package Done."

The semiconductor materials company would like to be all things material related to all fabs. During a meeting last week with media representatives, Marijn Dekkers, HEM president, said his company would like to become the Applied Materials of materials suppliers.

With the Honeywell-Allied Signal merger and the acquisition of high-density interconnect maker Johnson Matthey Electronics in 1999, HEM's product line is in a position to live up to the company slogan. HEM's five different groups the company refers to them as strategic enterprises consist of wafer fabrication materials, specialty electronic materials, advanced substrate technology and interconnects, advanced circuits, and electronic manufacturing services.

Dekkers suggested that having these diverse businesses under one company umbrella can help chipmakers bridge the gap between chips and packages.

"The question is, can you be better at what you do (as a group) than if you were on your own? I think we can," he said.

With industry leaders currently pondering ways to manage the materials supply chain and chipmakers looking for ways to reduce the number of suppliers they must deal with in running their fabs, Honeywell's strategy may be a smart one, said Elizabeth Schumann, a senior market analyst for Semiconductor Equipment and Materials International.

"I would say the basic idea of offering a broad range of fab materials for the semiconductor industry does seem to be one of the trends of the future," she said.

Materials suppliers in general don't get the same kind of return on investment as their customers do, she added while the semiconductor manufacturing industry enjoys a compound annual growth rate of about 17 percent a year, the materials industry only sees a growth rate of about 8 or 9 percent a year. Today, material suppliers are looking for different business models to become more profitable, to provide greater economies of scale, and to offer larger numbers of products. HEM's broad product range could help the company remain competitive, she said.

"What we are really focusing on is interconnect," said Jack Bolick, vice president and general manager of HEM's wafer fabrication materials division. "We're the only ones in the industry that have this breadth of portfolio. We provide every layer but the silicon," he said.

With the Johnson Matthey acquisition, HEM is the first company to bring metallurgy and chemistry together, Bolick said.

Bolick suggested that extending manufacturing tools to 0.07 micron will involve more optimization of materials and technology rather than just new equipment. Michael Thomas, chief technology officer for HEM's wafer fabrication materials division, agreed. He suggested that material suppliers will lead technology developments in the near future and that material companies like HEM will have to develop close partnerships with IC manufacturers.

He suggested the development of dual-damascene processes as an example.

"We have a vision of how we can make this a more cost-effective process," Thomas said, citing HEM's research in spin-on technology for low-k dielectric films.