Case Analysis

-TSMC
Chenhao Tang
Hang Yu
Xiaofan Gu
Arlina Anderson
Sayan Sengupta
Weiyi Ding

Q1
Is the emergency order and increase producti
on volume good for the company or bad?

The Volume
Good.
Demand for each recipe is growing and almost reach the capacity. It is important for the
company to increase their production volume. No matter its passive or active, the problem
must be fixed.

But its hard for the company to

handle the increase production
volume because it will cost the
company more money and time to
complete the extra orders.

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Q2
What are the key scheduling assumptions tha
t have been made?

The Utilization Rate

The assumption on utilization rate is the key. He assumed that each tool operated at
90% efficiency to allow some slack between steps during wafer moves, and he assumed
tools were available 95% of the time.
As you look at the job shop organization of Fab 12, can you outline some of the
simplifying assumptions or heuristics that are used to manage the complexity?
1.Built to highlight the assignment of tools to N65 and N90.
2.Estimated tool utilization.
3.Prepared a summary which shows the tool allocations and capacity for the month of
April.
4.Laid out a demand outlook for N65&N90 for the entire year, alongside of a capacity
plan.
5.Add 9 tools in August.
What do the managers of Fab 12 optimize?
He could shift demand by accelerating or delaying customer jobs, or he could adjust his
capacity by the installation of new equipment. He could also allocate more of the time
on tools that were shared between N65 and N90 to N65.
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Q3
What are the implications of a different number
of repeats for the Via Layer/ Inter-Metal Layer?

The Process
N65

N90

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The Process

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Implication

The repeat time

- Number of layers
- Process time, 24.7min, 1.6+1.8+1.2=4.6min
- The tool cost
Straight-line depreciation, 10years, 50 million
Example, Photo 193, 43.8 dollars, 73 dollars
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Q4
Are there advantages as well as adverse implications of t
he two process flow sharing a majority of their equipmen
t?

Advantageous Implications
Tools
Via Etch
Tools
PRS
Via Etch
PRSCoating
Coating
Etch Back
Etch Back
Scrub Clean
Scrub Clean
Trench
Trench
Etch Etch
Baking
Baking
Barrier
Seed Seed
Barrier
Cu ECP
Cu ECP
Cu CMP
Cudep
CMP
IMD2
IMD3
dep dep
IMD2
IMD4
dep dep
IMD3
IMD4 dep

N65
N65

N90
7.7
5.7
6.4
5.7
8.1
8.3
39.5
7
6.57
14
3.3
6.8
3.6

N90
7.7
5.7 11
6.4 9
5.7 10
8.1 9
10.9
8.3 13
39.5 62
7 11
9.97
6.57
21
14 6
3.3 11
6.8 6
3.6

Total
3.3
3.3
3.6
3.3
2.8
4.7
22.5
4
3.4
7
2.7
4.2
2.4

Total

Extra Tool QTY required to de

tools (EQTY)

Extra3.3
Tool QTY required
to
11
dedicate tools (EQTY)

3.3
3.6
3.3
2.8
4.7
22.5
4
3.4
7
2.7
4.2
2.4

9
10
9
10.9
13
62
11
9.97
21
6
11
6

TOTAL
=
Total Money Saved = $24.5 million
As depreciation accounts for 60% of product cost, this significantly reduces product cost.

1
1
1
1
1
1
1
1
1
0
1
1
1

Unit Cost
$4,000,000
$2,000,000
$1,000,000
$2,000,000
$2,000,000
$4,000,000
$500,000
$1,000,000
$5,000,000
$4,000,000
$1,000,000
$1,000,000
$1,000,000

$24,500,000

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Adverse Implications
Operations for each tool need to be at 90% utiliz
ation to allow some slack between steps of switchi
ng from N65 to N90
Otherwise, they can operate on 95% utilization.
(5% for maintenance)
If tools malfunction, both N65 and N90 process flo
ws will suffer, which would not be the case if there
were dedicated tools.
Dedicated tools could support higher utilization an
d hence support more production, but at the cost
of a minimum of $24.5 million.
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Q5
If you wanted to add capacity to either N90 or N65,
what you think is the least expensive way to do it?

Tool quantity change

As we know the bottleneck in this case is Cu ECP
which utilization rate is 104% according to Exhibit
10.Thus to add capacity, we can buy one more Cu
ECP, cost another 5 million, shown in the following
slide.

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Tool quantity change

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Or we try change the loading demand of N90 fro

m 22.6k to 22.7k,

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Q6
Does this suggest that certain types of emergency
orders are easier to accommodate than others?
Do you think some types of emergency orders will
be more costly to fulfill?

The emergency order

Its obvious that some types of emergency orders
are easier to accommodate than others.
According to Exhibit7 we know the bottle neck is
Cu ECP. In this case if the emergency order does
n'tt include add layers and only ask for 22.7k N90
, then it doesn'tt cost much.
However if it includes adding layers then theres a
need to buy new tools which cost more.

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Q7
What should LC try to optimize as he acco
mmodates the emergency order?

Optimization
Shorter MFG time
Maximize utilization(sharing tools)
Minimize cost& maximize the profit

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Q8
Are there recommendations you might make t
o senior management?

Recommendations
Purchase more tools to increase the capacity.
Charge extra fee for the emergency.

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Questions?