A Feast for Vultures
Vultures circled over SEMICON West. An unpleasant sight, because while our industry isn’t exactly in the best of health these days, it is most certainly very far from being in extremis.
Now before I tell you more about this, let me give you some background on what led to it.
Qimonda was a company spun out of Infineon Technologies to form what at the time was the world’s second largest DRAM company. It was a 300-mm manufacturer, and at its height in 2007, it globally employed approximately 14,000 people. From then to now, DRAM prices tanked due to oversupply, causing significant losses. Restructuring became necessary, but Qimonda went on hemorrhaging money due to the continuing decline in DRAM prices. This finally forced them to quit producing commodity DRAMs at their Dresden and Richmond 300-mm sites. Last February, their remaining fab in Richmond was closed. This was the first time ever that an operating 300-mm fab shut down; an unfortunate benchmark that has resulted in much human suffering. The current plight of the former employees is indescribable, and they have had to appeal to the courts for monies owed, creating a nightmarish litigation scenario.
Now to the vultures.
I’ve always thought that the end (let’s call it by its rightful name — the death), of something great that has sprung from the united efforts of countless dedicated people is a tragic thing that must be viewed with respect. Whether it is RMS Titanic slowly slipping under the Atlantic or the closing of a 300-mm fab, one of mankind’s most brilliant and complex technological accomplishments. These are all occasions for a moment of respectful silence, to feel sorrow and sympathy for those affected, and perhaps to briefly think with a cold shudder that there but for the grace of God go I. I have never considered that something like this could — or should — be turned into something offensive and cheap.
I now know differently.
Last week at SEMICON West one of the exhibitors was Emerald Technology Valuations, of San Francisco. They describe themselves as “an advisory, valuation, and liquidation firm that specializes exclusively in high technology equipment and inventories.” In short, they sell the equipment of failed — dead — high-tech companies. Several exhibitors and conference attendees called my attention to their presence at the show, some in indignation and others with incredulity.
The Emerald Technology Valuation booth at SEMICON West.
I went to see what it was all about. They had a nice booth with an attractive young woman running it, who was busily offering Qimonda’s equipment to the passersby. The booth was very colorful and festive-looking, with signs and video displaying which pieces of equipment of the dead fab were for sale. Now, let me be clear about this. The whole operation was completely above board and Emerald is a reputable and respected firm in its world. Doubtless, the sale of the Quimonda equipment being offered will help pay back something to all those people who lost their jobs.
However, that being said, I must very seriously question the judgment and good taste of those who decided — and agreed — that during this time of crisis SEMICON West was the correct venue for such an enterprise. We’re not talking about selling the used equipment of a fab that has upgraded to more modern platforms; these were the remains of a major player who did not survive the downturn. Had it been me, I would have declined leasing the booth space because, although probably an ideal venue, one must also consider the psychological and emotional effect that such an exhibitor will have on those of us who have closely witnessed with anguish and concern the current decline of our industry; if already not one of them, we all personally know some of its many thousands of casualties.
To use the premiere event of our ailing semiconductor industry to sell the goods of its fallen members smacks of an insensitivity that defies description. We, the walking wounded of a bleeding industry that may or may not be on the road to recovery after a series of vicious downturns and global economic catastrophes do not need to see what for us, in this context, is comparable to the desecration of a grave. There are many other more appropriate places where this could have been done.
As I stood in front of the Emerald booth, for a moment I had a vision of the young lady running it morphing into a grinning Boris Karloff holding a gavel, leading a grisly auction of organs.
Boris Karloff, my favorite auctioneer. (Universal Pictures)
“Ladies and gentlemen, how much will you offer for this fine matched pair of eyeballs? Do I hear $5,000? Who’ll give $5,500? Tell you what’ll I do, I’ll throw in for free this excellent set of high-tech colored contact lenses; you can make your eyeballs blue or green! Sold to the young lady with the dark glasses and white cane!
“Now we come to this prime liver. You can inspect it ‘til your eyes drop, but you won’t find a single growth or lesion on it — why, this young, vibrant organ has hardly been used! Who will give $100,000? How about one-fifty? Sold to Dr. Jekyll — oh, pardon me — Mr. Hyde for $150,000!”
I might be going overboard on this. However, although for most of my life I have tried to make it a habit to try to think, rather than feel, in this instance I found it impossible.
I felt this.
EX-Fab commented:
Qimonda’s bankruptcy and fab closure is a shame, but that’s life — and Emerald had a job to do. Besides, bankruptcy requires a broad marketing effort, so I am sure the booth was just part of a larger, sophisticated campaign. If there had been no booth, I imagine that someone would have written a blog talking about how outrageous it was that the assets were not prominently presented at a SEMICON booth. Anyway, it looks like the tools are getting a second life with Texas Instruments.
Mr Ion commented:
I appreciate the full totality of peoples views. People calling people idiots is not useful in any way to the audience.
Yes, both nature and business needs vultures and butchers. Like most people, many don’t want to see or know how meat gets to their table, so too; people don’t want to see or hear Emerald Technology Valuations publicly plying their trade.
The crux of the responses seem to center on how the various value statements in the article resonated with individuals. Responses vary in their mix of emotion and analytic analysis. All view are equally valid, except when the childish name calling occurs.
For me, I am just glad I didn’t get an offer from Qimonda after I interviewed in the fall of 06.
DocD commented:
Hey Blown Away, what happened? Did *your* interests get stepped on? Braun is not saying the equipment shouldn’t be sold, he just doesn’t think that Semicon West was the right venue at this time because of the downturn and the people hurt by it. BTW, those people are more likely to effected by the display at the show than by an ad in a magazine.
too fast too furious commented:
No one seems to rethink, this is partly due to hyped up growth prospects over the years, in the face of the fact that semiconductor technology will obviously become more difficult to sustain, as new materials, technologies, processes have to be continually developed.
Blown away commented:
Are you kidding me? They are selling equipment - not people. Your analogy is off base. It is not Emerald’s fault this business failed. Plus, a manufacturer will benefit from gaining some low cost assets. Is Bill Gates a vulture because he bought the OS from IBM? How naive are you? Are you the kind of guy who went to bed and got scared because it was dark and threw the blankets over your head? Open your eyes, Braun. There is a real world out there. Get in the trenches - don’t report from the sidelines. Furthermore, is it SEMI’s job to boost up the industry when it is stressed? Their job is to provide a platform for commerce. That boosts up the industry. Companies come and go. BTW - how does it feel to have the “vultures” paying a part of your salary? See the ad in the recent issue if you still are living in denial. Good day??? No, good grief, Charlie Brown???
A Feast for Vultures commented:
There is something about that attractive young lady manning the Emerald Technology Valuation booth that nobody even knows…she too is a victim of this declining economy. She was employed by what seemed a very viable company for several years before being it closed its doors for business. She was on an entirely different career path before being laid off. It’s lucky for her that she was able to become an appraiser for Emerald and regain her livelihood…if being Dr. Jekyl helps to feed her kids…hooray for her and Emerald!
10yr Qimonda Vet commented:
The article was very well written and heartfelt. Thank you for that. As mentioned earlier and unfortunatly true people are not the number one concern in a business model. People are actually the lowest common denominator. But in the journey up to end of the company the people where the place where cuts would take place to help fix the looming financial concern of the moment. At the end the we sat around in a haze looking back at the actions and we all came to a realization that the shut down was a planned event. Or at least a test studt in how not to run a multi-billion dollar business. And yes the Richmond, VA area is suffering from this closure. Add Circuit City to the equation and there are a lot of people in the region looking for work. While lookoing have to take positions they are over qualified for making significantly less money which hurts us all.
JH commented:
Alex,
I am one of the people that used to work at the Qimonda Facility in Richmond. Thank you for your heart felt article. I was a shame to decommission systems that I installed or helped install. Some systems were still in warranty. During the last few months shredding years of proprietary work simply broke my heart. I agree that the used system sales at Semicon West could have been done differently. However, this was a good way to gain exposure quickly.
200mm castoff commented:
Let it go! Qimonda is gone and will never rise again. If these tools are sold, we may get some of the money, I’m owed close to $50K in unpaid wages. Let them sell it all and bull dose the place to the ground, I don’t care and neither should you.
Observer commented:
Playing devil’s advocate. Many equipment manufacturers sell their older or used equipment to the market for various reasons, we know this. But, Emerald Technology Valuations should not be faulted or seen as dis-tasteful for selling equipment from a former supplier of the industry. There are viable companies within the Semiconductor world that depend on older equipment to keep their businesses running and to start off. To note, the author of this blog post nor any replies had negative feedback on the products from Qimonda themselves. At the same time; SEMI does a poor job of screening applicants for booth space. A small form with questions and payment seems to be all that is required for a company who is “affiliated” with the semiconductor industry qualify. A proper understanding of who and what a company represents should be researched before being allowed to exhibit; not just filling the open booth spaces.
Full Disclosure commented:
I think it might be worth noting that Semiconducor International’s July issue includes a full-page ad from Emerald Technology Valuations for the very same Qimonda equipment. Is that a better forum than SEMI’s booth space? And on this website, DoveBid is advertising its auction of Qimonda equipment. Is that okay?
Tom Morrow at SEMI commented:
Hello all,
I didn’t receive any complaints during the show and don’t think it was in poor taste or insensitive for them to exhibit at SEMICON West, but I appreciate the perspective. The secondary equipment market has always been an important segment of the industry. All the top OEMS have high quality “pre-owned” programs for their tools that often have long life spans covering multiple owners. Emerald Technology Valuations is a very reputable firm, a member of SEMI and of our Secondary Equipment, Services and Technology Group (SESTG)who have pledged ethical business practices and high standards. The alternative to quality firms like Emerald is, unfortunately, often unqualified brokers with no expertise in handling potentially hazardous equipment who sell used equipment on the grey market, sometimes even on eBay.
1Geek commented:
SEMI blew it. BTW, I wonder if Jay Kelly would have the guts to call you an idiot to your face. Bad form, dude, your mom forgot to teach you manners. (:>
feeling old commented:
Used equipment will be a big part of all capacity additions for probably the next decade. The average visitor age in the solar west hall was about ten years younger than average visitor age in the semiconductor south hall. Things are changing but I just don’t yet know exactly where or how.
Barry Weavers commented:
I think SEMI should have shown some degree of sensitivity and just said No!
I understand the “AFAB”mentality that seems to be permeating many declining Trade Associations these days (due to their inability to sell ever more expensive booth space at shows with declining audiences).
SEMI promote their events as the premiere happenings for semiconductor industry worldwide and it seems ironic that this very organization should accept this vendor; with apparent disregard, or worse with no thought, to the negative effect this exhibit would have on so many.
While the semiconductor industry needs companies such as Emerald Technology Valuations, I question the wisdom of such on the show floor – clearly a demoralizing influence for many exhibitors and attendees.
jay kelly commented:
Idiotic position taken by Braun. Used equipment dealers are invaluable to the vast majority of start-ups and small ventures. Small concerns, like the one I work for, attend SEMI to find new ways and inexpensive methods to support our efforts. Who cares that some bloated mis-managed operations went bust? Happens all the time. Braun’s abysmal opining seems like socialist propaganda. I think Emerald should be rewarded for smart marketing. Really Braun, you must be joking, right? Proposterous!!!!
FabLite commented:
If LOOKCLOSER will look closer, he’ll realize the author does not say Quimonda and Emerald shouldn’t have the right to sell wherever they please. He is saying it was insensitive and in poor taste. Nobody can disagree with *that!*
LOOKCLOSER commented:
I don't agree with this blog. Quimonda has a right to sell its tools and Emerald has a right to offer them for sale wherever it wants.
FabLite commented:
FormerQimonda300mm is right when he says the equipment has to be sold and other fabs will be able to use it to succeed. What Braun is saying is not that it shouldn’t be sold, just that where they were selling it isn’t the right venue and he is right.
Jason Latimer commented:
What surprises me most is SEMI. Didn't they realize the effect this would have on those attending? Aren't they, too, supposed to be part of the industry? I am glad that you called our attention to this.
JohnR commented:
I was at Semicon West and saw the booth. It was disgraceful!
SiGuy commented:
No surprises here, dollars always come before people. [:=(
Adolfo Gutierrez commented:
Thanks for providing a requiem for the human tool of failure in technology.
I wish you had also mentioned the cost of lost opportunity for billion of dollars in economic incentives poorly allocated as public incentives for Infineon and Quimonda.
These monies could have been used to reduce public debt, educate children, provide welfare, and many other public functions. Instead they have been lost supporting a failed business venture that did not have enough market support to become or remain viable.
The history of technology, and of our industry in particular, is the history of failure and Darwinian struggle for survival. Our high standards of living are due, in large part, to these mechanisms supporting the efficient deployment of capital.
Negative feedback processes, including reorganization, failure and liquidation are all elements that make capitalism the greatest economic engine ever developed. Our industry needs Emerald Technology Valuations just as much as it needs Infineon and Quimonda innovators and workers.
helloMoto commented:
those very same executives made the brilliant decision to spend $350 million to upgrade a 200mm line to run an obsolete technology. Now all they have is BWL snakeoil to peddle.
long time Q'er commented:
I wish they would have put as much effort into keeping the company afloat or restructuring further as they have put into selling off all of the equipment and things. So much effort has gone in since the bankruptcy, but little beforehand…it’s pretty damn having personally witnessed the whole thing.
FormerQimonda300mm commented:
I understand you point of view.
I am formerly a Qimonda 300mm employee as well however I want to give you another point of view: If you fail, the winners get to pick you apart for pennies on the dollar. That is the nature of competition.
This is business. If surviving semi companies can get cheap equipment to help them survive then that is a good thing and not a bad thing.
There are winners and losers in business, that’s life.
ExQ'er commented:
Thanks for recognizing the efforts of those involved in Qimonda. It was a sad waste of potential indeed, and devastating for so many families in Richmond, VA. The city is reeling from the loss of so many high-tech, high-paying jobs.
Just Wrong commented:
A nightmare just in time for Holloween!
I did’nt think anyone cared, Thank you from a former Q employee (10yrs).
exqimonda commented:
the monies are going back to pay the multimillion dollar bonuses to the executives
that managed the company.
