1. TECHCET CMC: Associate Members Monthly Meeting
Diane Scott
August 2017

2. Confidential Information
The information contained in this presentation is for the use of TECHCET’s representatives and customers or prospective customers. It is considered confidential in nature and should not be shared with others outside of the aforementioned parties. Your cooperation is much appreciated. 2

3. www.techcet.com info@TECHCET.com
Introductions
CMC-A Facilitator
Diane Scott 3

4. www.techcet.com info@TECHCET.com
Agenda
Hot topics ( to discuss later)
CMC-A Updates
Sputter Target presentation by TECHCET Analyst Terry Francis
20 min presentation by Terry Francis, TECHCET’s Sr. Analyst for sputter targets, will be providing an update regarding the status of this key material.  The update will focus on market drivers, supply- chain risks and providing highlights of TECHCET’s recently published Critical Material Report (CMRTM) Advisory entitled “Sputter Targets”
Please let your colleagues know about this beneficial opportunity and forward the meeting invitation as applicable.
CMC Seminar Announcement
Working Group Potential- Solvents for leading edge lithography 4

5. www.techcet.com info@TECHCET.com
CMC-A Updates
Welcome new members
New offering for members
35% discount on additional reports 5

6. www.techcet.com info@TECHCET.com
Terry Francis
Terry Francis – Sr. Technology Analyst of TECHCET— covers metals/sputter targets markets and supply-chains. His work experience includes CTO, Sr. Director, Technical application expert, process manager and engineering management from companies such as Matheson, Air Products, Applied Materials, Burroughs, NCR, AMI, and National Semiconductor. He has over 40 years of experience in the semiconductor industry and has managed businesses from $2M to over $100M in revenues. In addition, he is experienced in material, chemical, and electrical engineering as well as the R&D and development programs in the Chemical/OEM/IDM sectors in the microelectronic industry. He holds a M.B.A. from National University, and a B.S. in chemistry from Oregon State University. 6

7. TECHCET Critical Materials: Sputtering Targets/Metals
Terry A Francis
August 2017

8. Market Assessment/Analysis
There is risk in the material supply-chain and changes in prices are expected during the forecast period (through 2021).
Copper - price trend: increasing.
Tantalum – price trend: stable to decreasing.
Cobalt – price trend: increasing.
Chinese target suppliers - price dynamic that needs to be watched.
Material profitability impact – mine closures possibly continue.
Target costs can be driven by material or target manufacturing costs (details in Sputter Target Report)
Geopolitical and export issues continue to be factors - Russia and China.

9. Updates
As predicted in the TECHCET Technology Trends report, PVD growth in selected device markets has increased.
Multiple ReRAM memories are in production.
Ge2Sb2Te5 (GST) is the material used but several dopants are being employed to improve reliability and device performance.
STT-MRAM is in production.
The process used is PVD and process control is absolutely critical in this device structure. Ta, Ru, NiFe, MnIr, CoFeB, MgO are the compounds used.
FE-RAM are in niche application production.
Lead-Zirkonate-Titanate is the major material needed.

10. Copper
Despite mine outages reducing supply by 12%, prices of copper have not risen as expected by financial analysts.
The deciding factor is China production and demand. This remains stable at a 3% growth and since this is a year for the China Party Congress, expectations are for stability.
The primary factor in China internal demand is the improvement in their electrical grid structure. TECHCET does not expect impact on sputtering targets at this time, but will follow closely.
World Copper Conference indicates shortages predicted in 2020 due to shortage of new supply projects versus projected demand growth.
Predominant growth is in the power grid sector development.
Copper manganese targets are more prevalent in the market for barrier(SFB) usage.
Copper usage in the metal plating sector for damascene and packaging is covered in a separate TECHCET report .

11. Global Growth in Copper: 2016 Changes and Surprise
London Metal Exchange
20,000mT
2016
2017
On a global basis, copper demand appears to be heading toward a shortage. (CRU-Commodity Research unit)

12. Aluminum Aluminum at a moderate surplus of 0.4 MMT for 2017.
China took steps to reduce Aluminum surplus keeping price steady to slightly increasing.
Aluminum prices up 3.4 % to $2030/mT
TECHCET is watching the green house gas policies on a global basis.
Countries adhering to this need to control Aluminum production due to coal usage for power generation.
Overall impact on targets is minimal.
Japanese chemicals company Showa Denko K.K. announced that it plans to double capacity at its high-purity aluminum foil plant in China due to rising demand for capacitors.

13. Cobalt
Cobalt will be reviewed as it is becoming a replacement for W-plugs to improve contact resistance - the mining issues, in terms of conflict materials, is relevant.
On the demand side, strong requirements for cobalt in lithium ion batteries is continuing and growth is seen in applications such as high performance alloys, tool materials, and catalysts.
On a conflict material basis, both Intel and Apple have restrictions on use from the DRC.
Pricing for cobalt has risen form $15 to $24 per ton recently.

14. Cobalt Integration

15. Sn Update
TECHCET is tracking the Sn commodity due to its use in EUVL and SAC solders.
EUVL is a small use but requires high purity. (Price or availability impact can be issue due to low volumes)
Sn Prices have decreased recently despite market expectations of increase. Largest growth is in the automobile battery applications.
SAC or Pb-free solders continues to grow due to FOWLP, Flip-chips, PCB.
In a separate TECHCET report, we are predicting growth of SAC solders at 23%CAGR over 5 years but TSMC A11 inFO introduction has several market predictions that are at the 50%CAGR.
Tin production is 200,ooo-300,000 tpy on a world-wide basis, 50% controlled by China . Total solder consumption is 40% based on recent global reports.

16. Rare Earths
China still controls 90% of production and is in command of market pricing.
China has 10 focused programs on Rare Earth development / applications along with three focused research centers.
A view of the China’s strategy to maintain control in this sector:
China’s Ministry of Industry and Information Technology (MIIT) issued “Guidelines for formation of large enterprise groups of rare earth”. It requires by law that the China’s rare earth industry integrates and restructures into six large State-Owned-Enterprise (SOE) groups: China Aluminum Group, China Minmetals Group, Northern Rare Earth Group, Xiamen Tungsten Group, Southern(Ganzhou ) Rare Earth Group and Guangdong Rare Earth Industry Group.
China’s policy makers believe this will “let Chinese rare earth industry to form a joint force to facing the outside world to change the current rare earth oversupply situation, effectively control the rare earth production and marketing.”
China Treasury also established special funds to subsidize its Rare Earth restructure & exploitation. It issued subsidies of 458 million yuan ($67 Million) to the Ganzhou Rare Earth Group for the development and comprehensive utilization of resources dedicated to rare earth, rare earth mine geological environment restoration. Since 2012, Ganzhou Rare Earth Group has received total subsidies of 950 million yuan($140 Million) from China’s Ministry of Finance for its rare earth exploitation.
No progress on US REE supply-chain other than small academic investments in Ion Exchange extraction.
Semiconductors are in the lower percentile of use but due to Rare Earth use in major application products, this has a drizzle down affect.

17. Market Assessment/Analysis Recap
There is risk in the material supply-chain and changes in prices are expected during the forecast period (through 2021).
Copper availability could run short starting 2020 due to supply
Tantalum ore prices could go into surplus due to Lithium mine production
Market penetration by Chinese target suppliers and possible new entrants will force price pressures on targets. Impact is already being seen in Al and will continue with Ti, and Cu
Mine closure have been evident in line with attempts to manage supply/demand pricing and the profitability factors of specific mines
Ta and W prices are highly leveraged by price changes in raw materials and recycling. Costs of Al, Ti, Cu, and other targets materials are more dependent on fabrication costs than raw material costs.
Cobalt prices have risen and the conflict material concerns are evident.
Geopolitical and export issues continue to be factors - both restrictions on Russia and China could cause major disruptions in the supply-chain.

18. Thank You! tfrancis@techcet.com 908-285-3636

19. Potential Working Group – No Update
Topic : Solvents for leading edge lithography
Poll CMC fabs members first
Notify CMC-A of outcome 19

20. www.techcet.com info@TECHCET.com
Plans for Next Meeting
Monthly meeting schedule
Fourth Thursday of the month
EXCEPT SEPT
Wednesday Sept 27th (8:30 am / 4:00 pm PDT)
Next F2F in Asia
Late October 20

21. AR List for Next Meeting
What
Who
When
Schedule next meeting
Diane Scott/TECHCET
Sept 27th 21

22. www.techcet.com info@TECHCET.com
Hot Topics Discussion
8/24 8:30am call—none
8/24 4pm call- none 22

23. Thank You! Diane Scott dscott@techcet.com 23