Extreme Outsourcing

Imagine ordering a new car in the not too distant future. Soon after you place your order, delivery trucks pull into your driveway and begin unloading packages containing the engine, chassis, transmission and other parts. Automotive technicians arrive and begin to assemble the various components. Within a few hours, your gleaming new chariot is ready for you to drive away.

Now apply that same model to the semiconductor sector and you'll begin to see how we at Axcelis intend to reduce costs and speed delivery times for buyers of our chip manufacturing equipment. Recently we began testing a new process that we call “merge-in-transit,” in which fully tested system modules will be shipped directly from our suppliers to our customers, or nearby staging areas, for final integration — completely bypassing our factory floor in Beverly, Mass.

Although very different from the conventional manufacturing paradigm, merge-in-transit in many ways is simply an extension of the ship-from-cell manufacturing strategy that we began using nearly a decade ago. The ship-from-cell process starts with us assembling equipment into standalone modules that are tested, inspected and packaged under cleanroom conditions in our own factory. We then ship the tested modules to customers' facilities for final integration.

Our previous, conventional manufacturing process involved assembling, integrating and testing complete systems at our factory, then taking them apart for shipment and later reassembly at customers' facilities. Essentially, this required us to assemble the same systems twice. But by the late 1990s, as we started using more of a lean manufacturing strategy, we began to see a clear opportunity to boost efficiency and quality by streamlining our processes.

So if ship-from-cell offers such great advantages, you might ask, why isn't everyone using it? Primarily, because it's not an easy process to plan and execute consistently. Complex tools need to be designed as modular sub-assemblies that can be quickly put together and calibrated in the field — without disrupting customers' ongoing production. Test software needs to be written. Quality control must be kept at an extremely high level, both in-house and at the component and module suppliers. The truth is, other companies have tried to emulate this model, but few thus far have succeeded.

Today, ship-from-cell accounts for the majority of our company's total shipments. We estimate that it saves our customers five to seven weeks of factory cycle time, while also reducing labor costs. We expect merge-in-transit to deliver even greater savings on logistics and shipping costs, and even faster deliveries to our customers.

However, even with years of experience, we remain very cautious and deliberate in evolving our manufacturing strategy. New products, for instance, are always produced at our own factory until we are certain that our outsourced assembly and test procedures are ready to move to customers' facilities.

As we prepare to launch our new merge-in-transit initiative, we are carefully simulating and fine-tuning the process in our own factory. We're updating the contents of our technicians' toolboxes, practicing loading and unloading modules and trying to anticipate any complications that could conceivably arise during a field-assembly situation.

We plan to begin the merge-in-transit process with our recently introduced Integra RS photoresist dry-strip tools. Only after the process is fully proven with them will we begin to extend it to other wafer-cleaning and ion-implanter lines.

It is still too soon to know how much cost and time savings we can expect from merge-in-transit. Theoretically, the lead times for sourcing and integrating the necessary modules could be reduced to just a few weeks. That's partly due to the Japanese-style kan-ban system we use with some of our suppliers. This will allow us to immediately pull the necessary components and modules as soon as orders are received. Eliminating much of the duplicated logistics, shipping and labor required for multi-stage assembly and disassembly should result in additional time and cost savings for our customers.

We also expect customers outside of the United States seeking to increase local procurement to be pleased by having more of the assembly and final integration of their chipmaking equipment take place within their own economies.

For now, most people still have to settle for buying their cars ready-made from the dealership. Thanks to merge-in-transit, however, chipmakers should soon be able have at least some of their equipment orders filled more quickly, efficiently, economically and, if they choose, assembled on their own premises.