Toyota Production system applied to semiconductor fabs will transform the business

The Toyota Production System was applied to a semiconductor fab and they reduced the manufacturing cost per wafer by 12 percent and the cycle time—the time it takes to turn a blank silicon wafer into a finished wafer, full of logic chips—by 67 percent. In addition, the number of products produced increased by 50 percent, and the production capacity increased by 10 percent, all without additional investment. If the fab continues on this journey of organizational learning and improves aspects such as equipment maintenance variability, even bigger gains are expected.

The new economics of semiconductor manufacturing now makes it possible to produce chips profitably in much smaller volumes. This effect may not be very important for the fabs that make huge numbers of high-performance chips, but then again, that segment will take up a declining share of the total market. This isn’t because demand for those chips will shrink. Rather, demand will grow even faster for products that require chips with rapid time-to-market and lower costs, such as consumer electronics.

Implementing TPS not only reduces the cost per unit at a given production volume, it also reduces the minimum number of units a fab needs to turn out to be cost-effective. That is, TPS moves the cost curve down and also broadens it.

Spear and Bowen (then at the Harvard Business School,) distilled TPS into four rules, which in summary are (1) highly specify activities, (2) clearly define the transfer of material and information, (3) keep the pathway for every product and service simple and direct, and (4) detect and solve problems where and when they happen, using the scientific method. When we present these rules, even in their fully detailed form, clients generally protest that they “do it that way already.” But on closer examination—while auditing their fabs—we often find something quite different.

Here is the TPS questions to see if your fab is really following best practices:


1. Do you know the theoretical minimum time to process a wafer?

2. Do you know exactly how many process steps are required to complete a wafer?

3. Is your actual manufacturing process time less than twice your theoretical minimum process time?

a. Do you know the critical process step that constrains the throughput capacity of your fab?

b. Is the uptime of the process equipment in that step predictable?

c. Is there a fundamental reason that the manufacturing process time cannot approach the theoretical minimum process time in your fab?

4. Do you know the cost per wafer of each process step?

a. Is your scrap rate less than 2 percent?

b. Is your rework rate less than 2 percent?

5. Do you know exactly how many wafers are in your fab?

a. How many are product wafers?

b. How many are test wafers or process-monitor wafers?

c. How many are engineering wafers?

d. What is the ratio of product-wafer processing to non-product-wafer processing?

6. Were you able to rapidly identify and trace the latest drop in yield in your fab?

a. Did you have enough data to empirically correlate the yield drop to a piece of equipment or specific process step?

b. How do you know that the process equipment is operating within specifications?

7. Did everyone give you the same answers?

Were they all in the fab today?

Comments are closed.