Semiconductor Fab construction: A realistic perspective

If chip design is considered to be glamorous, then fabrication of the chip is akin to neurosurgery. The precision, the controlled environment, expensive tools, and pinpoint accuracy – all these define semiconductor fabrication.

But what about the factories in which these microelectronic devices are fabricated and packaged? What goes into building them?

Before you dismiss it as “So what, it’s just another industrial plant” spare a thought to the rigorous engineering that go into making this factory. Vibration damping, insane levels of control over humidity, dust and static, the capability to process huge amount of water and effluent, 50-60 types of gases going in with many of them extremely toxic and inflammable, multiple toxic chemicals – basically an extremely hazardous yet precision-engineered factory. So it’s not “just-another-factory” by any stretch of imagination. Yet, it has to be built on ground using concrete, steel and cement. And it absolutely must adhere to extremely high standards of safety, performance and sustainability.

Planning for construction

So how does one go about constructing a Semiconductor facility?

You start with a basic site plan which broadly divides the site into zones, and the areas for the main buildings are marked out – where would the Fab/OSAT be located, where would the utilities be placed, the admin buildings, the power station, the gas yards, logistics park etc. This is done based on many factors -- the contour of the land, the access roads, the expected flow of materials (and people) etc.

 After this, the basic concept design (aka “schematic design”) is done, wherein the buildings are detailed, pathways defined etc.

After that starts the detailing – and you will hear terms like LOD (level of design) which defines stages of detailing and definition in a Building Information Modeling (BIM) system wherein each building is described in considerable detail.

At this stage, typically Engineering Procurement and Construction (EPC) companies (like Tata Projects) are invited to respond to a Request for Quotation (RFQ) to build this factory. There are various contracting models here and these depend upon both the maturity and strength of the client’s team, as well as the maturity of the ecosystem to support the construction. A point to be noted here is that semiconductor facility construction is a greenfield activity in India, and the ecosystem is evolving even as the first few plants are being constructed. A very important point to keep in mind.

Since these are very complex building projects, with construction time-frames ranging from 24-36 months, there are multiple entities involved. There will be a design consultant, the EPC company itself, a project management company to oversee execution etc.

It would be good to keep in mind that what is said about design and coding in software development – the same principles also apply to the semiconductor construction industry. In software they say 80% of the project time must be spent in design, and 20% in coding and testing. For very complex EPC projects like semiconductor Fabs and OSAT’s, based on my experience I would say that you should give a minimum of 6-7 months for design BEFORE you get into construction. Sadly, we see that people assume that the EPC contractor should start pouring concrete within 60 days of award of the project. That is not just asking for trouble – it is laying out a red carpet for disaster to strike!

The ecosystem and technology challenge

Building such complex structures requires a comprehensive ecosystem of vendors and installers for systems for handling gases, chemicals, water treatment, HVAC etc. Special piping is needed, along with highly skilled technicians to install and work in a cleanroom environment. Several advanced construction techniques have been deployed – from clean fabrication to off-site manufacturing of complex utilities, to complicated engineering execution to lift and fit these pre-assembled pieces into place. Availability of skilled technicians, not just at the owner’s side but also with the EPC contractor and their vendors, is also a major challenge. Skilled manpower simply does not exist in India, as these type of facilities are being built for the very first time here -- at this scale,

A significant use of technology is also seen in this industry. Lidar-equipped drones for progress monitoring, advanced modeling techniques for visualizing construction, simulations for complex Mechanical Electrical and Plumbing (MEP) design, AI-ML tools for analyzing complex project plans and forecasting schedule slips, identifying remedial paths etc. Standard project management tools and human optimization fails when project plans of 10-15K lines have to be analyzed, optimized and remedial paths found. Plus, these are very large sites of 30+ acres or more. It would be impossible to monitor these types of projects without technology aids.

Time constrained execution

In more mature industry segments like say Oil & Gas, or Airport construction, or building large hotels, the EPC company would come in after the design is completed – or the design is at say an LOD-350 stage. But in fast track projects like semiconductor facilities, we often see construction starting up as soon as basic concept design is done. Typically, we see basic earth work and foundation preparation activities like piling start even as Schematic Design is on-going.

Once the basic footprint of the main buildings is done, a (gu)estimate of the loads is made, a safety margin added, and piling for foundation work is started. This is to parallelize activities, and shorten time to completion. This is akin to riding a bicycle on a tightrope strung between two skyscrapers! The adrenaline rush is extremely high, but so is the risk of failure and subsequent rework. Given the extremely high investments being made, I would urge all stakeholders here to pause, take a deep breath and reassess if the path currently being followed is worth the risks (and costs) that everyone concerned is incurring. Is the risk even worth the perceived saving of time?

There’s another very real problem in compressing time schedules to such an unrealistic extent. Resources for construction are not available in sufficient quantity within very short periods of time. For example, piling rigs or ready-mix concrete (RMC) plants with sufficient capacity to meet extremely high peak demand spikes within unrealistically short time frames. Add to this Owners who add clauses like stringent LD conditions to contracts – to try and force EPC companies to meet these unrealistic timelines. This leads to cost escalation and puts undue pressure on all stakeholders. This will lead to construction projects with heavily stressed supply chains, as all stakeholders scramble to meet completely unrealistic timelines. A-L-L stakeholders in India would do well to examine how such projects have been executed in countries with more mature ecosystems. There is no jugaad that can cut short the time to the absolutely unrealistic time-frames being proposed in India.

The finer things of life take time –like dal slow-cooked over a charcoal fire. Mm, delicious! But it will not be available in 30 minutes! It cooks for hours – and should also be eaten slowly and savored!

Remember, a Semiconductor Fab/OSAT is a facility which is built to perform at peak efficiency for the next 20-30 years. Please don’t rush the project unrealistically just so that you can start production 12 months before the realistic date. You will regret that for the next 20 years as you debug the facility to meet the exacting needs of a truly globalized semiconductor industry. After all, your global customers want chips made to exacting standards – not chips from a factory built in an unrealistically short time.

Contracting Models 

Contract models also vary. Where the client is fully staffed (very rare, since teams are typically being formed after the project starts), they can go with a item-rate contract with a Bill-of-Quantity (BoQ). Here, all the line items are detailed and the EPC companies are invited to bid to build the facility based on these.

This pre-supposes several things -- that the company asking for the Fab to be built (‘Owner’) has a very detailed design done, a very knowledgeable team with experience in construction, and knows exactly what they want. The last bit is important, as designs tend to evolve as construction progresses – and these kind of contracts often lead to disagreements, especially in greenfield projects. An EPC company that has quoted on an item-rate contract will strictly execute against that. Any change will result in a Change Request (CR) and often clients are taken aback at the volume and value of the CR’s – which is a result of them not knowing what they were getting into in the first place.

A sensible contracting model, especially for greenfield first-of-its-kind projects is what is called the open book model. Here the EPC contractor and the Owner jointly negotiate rates as the design evolves and clarity is achieved. The EPC company would charge a mutually agreed upon fixed management fee and assumes responsibility for placing orders, managing the supply chain etc. At some point, typically when the design reaches say LOD-350 level, the open-book model converts to a lump-sum model. Or, an upper cap is fixed, and the EPC vendor is often incentivized to achieve further savings. There is complete transparency in the model and both the Owner and the EPC company share all cost and negotiation data transparently.

Tensions start when Owners interfere in the construction process and try to micromanage. All over the world, and particularly so in South Asian region, we are dealing with a very family-oriented and emotional labor scenario. Be it a mass exodus of labor during festival time (Diwali, Holi, Chhat puja, Lunar festival etc), or be it other contingencies (eg elections), there are labor disruptions. This becomes a major issue when fast track project execution is underway for mega projects where literally thousands of workers are deployed. EPC companies are well versed in dealing with these and can manage contingencies reasonably well. The problem starts when there is excessive micro-management either from the Owner side – or even from over-zealous regulators. My personal opinion is let the professionals do their work. Just as you would not micromanage or second-guess a surgeon or a lawyer, so too do not try to micromanage or second-guess an EPC contractor.

As the Owner, it is your right to review progress and point out flaws or shortcomings. But to try and interfere in staffing decisions, vendor management etc is asking for trouble. And of course, please take a moment and glance at your own backyard – is your design final? Are your teams up to speed and knowledgeable? Please do remember that ONLY a ‘partnership’ model will work for first-of-its-kind Greenfield projects. If you turn it into a toxic buyer-supplier relationship, then you are setting yourself up for inordinate stress.

In conclusion

Construction of semiconductor facilities -- Fabs, OSATs, Display Fabs etc – is an exciting and fast growing area of the construction industry in India. As the Govt of India races to build semiconductor capacity in the country, there is a tremendous opportunity for specialized EPC companies to build their own capacities and take on the challenge of executing such projects.

Forward looking and progressive EPC companies have invested ahead to build capacity and capability. And most are very well aware of the weight of responsibility that lies heavy on their shoulders – viz. that what they are building are the “temples of modern technological India”. That is something that the management of these companies never lose sight of as they build these modern high-tech global facilities.

Note: The views expressed by the author are in his personal capacity and based upon his long career in the semiconductor industry.