Challenges of selling used equipment in global secondary market

The recently concluded SEMICON TAIWAN had a very interesting session on: The Challenges of Selling Used Equipment in Global Secondary Market, by Michael Mihin, Global Account Manager, Broadway Engineering Services Teams Inc. (BEST).

According to Mihin, there are about 600 IC fabs worldwide in 2007 -- 47 in Taiwan, 42 in China, 35 in Korea, 19 in Southeast Asia, and 28 in rest of world, 182 in Japan, 89 in Europe and 158 in the USA. As a result, the challenges posed by used equipment exists worldwide.

Mihin put down these challenges as -- rebuilding OEM equipment to capabilities equal to OEM specifications; supplier response at factory location instead of single country location; providing capacity at a lower cost with recycled equipment; and project revenue to support local resources in country with fab locations.

As for the benefits meeting these challenges, those are said to be extending life of tools by refurbishing, lowering cost of ownership, local contact for warranty and maintenance, parts support with local partners, out of country tech support within 48 hours, and partnering with local resources to meet fab requirements.

Applications include rebuild company supplies refurbished tool, fab supplies tool and rebuild company refurbishes tool onsite at fab, rebuild company changes chambers on in fab tool to reflect new process requirement, and rebuild company supplies refurbished chambers and fab installs on tool. Time is the issue with 2X the time in fab.

Equipment opportunities exist such as providing refurbished equipment that is capable of meeting new equipment operating specifications, availability of donor tools as market requires, new equipment versus refurbished equipment value analysis, and refurbished parts versus new parts to complete the project.

As for the pricing challenges, these include dealing with refurbished tool that is 30-50 percent less than new, travel costs and expenses without margin adder, software upgrades without margin adder, rebuild field service engineer hourly rate less than OEM, and market price of donor tools influenced by supply and demand.

The 200mm tool supply is increasing, and the refurbish process takes eight to 12 weeks for most tools. Apparently, regional support/alliances are being developed. BEST offers USA phone support Monday to Friday, and parts support in 48 hours from USA.

Concluding, Mihin said that the world was operationally flat. Challenges were being met by alliances and consolidation of service providers. Legacy tool support was moving to certified rebuild companies. Finally, local capabilities were needed to meet language and communication requirements of a fab.

The challenges of selling used equipment could be a challenge in India too, as and when fabs come up, make no mistake.