What Australia can and should do in silicon

Last year the former government asked the nation’s Chief Scientist, Dr Cathy Foley, to develop a national semiconductor plan. Brent Balinski spoke to Foley to learn what’s happened since, and for her perspective on where Australia can expand its role.

About three years ago many people who had previously thought little or nothing about supply chains learned about their importance, and the desirability of simplifying and reshoring them.

There are certain pockets of excellence in various parts of the value chain, but little in the way of production. It’s hard to be certain on what exists to build on, however, as the industry is famously disaggregated to begin with, while its patchy presence and low local profile don’t aid in stocktaking.

Shortages of goods including microchips have persisted since.

An Australian Semiconductor Sector study, published by the NSW Chief Scientist in December 2020, has been followed by other efforts to take stock of what microelectronics muscle might be built here, perhaps to help insure ourselves against supply risks. These have included the Australian Strategic Policy Institute’s Australia’s semiconductor moonshot, and this publication’s Australia’s place in the semiconductor world series.

One estimate put forward by a local expert is that Australian semiconductor companies cumulatively earn about $100 million a year, within a sector predicted to reach $US 1 trillion globally by 2030.

“One of the things which I think is important is that Australia does have a small semiconductor industry, but it depends on how you define it. Because we’re strong in design,” Dr Cathy Foley, Australia’s Chief Scientist, tells @AuManufacturing, citing companies such as wifi chip specialist Morse Micro.

“But we’ve also got strengths in compound semiconductors, so it’s not just Silanna, but [also] Bluglass, Australian Nitride. So there’s a couple of companies there and that’s a real opportunity for us to grow.”

Something else worth highlighting – and which Foley says was missed by the NSW report – is the local strength in photonics, with an Australian Optical Society report calculating that sector as worth $5.4 billion, with over 500 companies and 12,000 employees across ANZ.

“And I think one of the things we need to point to is that part of the reason why sometimes these things are invisible is – particularly like photonics – that the way that data is collected about different industry sectors doesn’t go down to the granularity where these can be teased out,” Foley added.

In May last year, before losing the election, then-prime minister Scott Morrison tasked the Chief Scientist with developing a national semiconductor plan.

Foley concedes that it is no small task, and major developments since – among them a change of government here and massive policy announcements by governments overseas – have provided complications

There is no easy answer to Australia’s place among nations trying to rebalance their supply and production of chips and related inputs.

“Of course we want to have a sovereign supply chain, but you’ve got to really think about whether there’s a sustainable business there as well, and how you partner and where the opportunities are,” explains Foley of some of the many, many considerations.

“So what we’re doing at the moment is working our way through and understanding all these things and considering what’s the most appropriate way for us to complement and not duplicate. Where is our niche, and what is the best pathway forward?”

One suggestion to boost local activity – for example in the ASPI report and through this title’s recent editorial series – has been investment in production of compound semiconductors, which can have uses including in wireless communications, power switching, and photonics.

Dr Steve Duvall, an independent semiconductor professional formerly of Intel and Silanna Semiconductor, told @AuManufacturing recently that an investment of $50 million was enough to get started in basic manufacturing, “or you could go up to $200 million and have a larger facility that could actually be used for initial production.”

These might not seem small amounts, but they are next to the $20 billion figure often given as necessary to establish an advanced logic chip factory.

Foley describes looking at compound semiconductors as “interesting and probably within our remit” though cautions that anything requiring taxpayer investment would need a strong case, and not become “a stranded asset for the country and… a waste of government money.”

A recurring theme during the conversation, which took place the week before Christmas, was the importance of recycling for silicon.

The predicted required volume of solar panels – a semiconductor product – to meet Australia’s goal of 82 per cent renewable energy by 2030 will be immense. According to energy minister Chris Bowen, 60 million 500 watt solar panels would be installed by 2030 in service of this target.

The circular economy will be important for all that silicon. The hunger for solar energy, here and abroad, also presents a manufacturing opportunity, according to Foley.

“One [issue] is just scale – materials, which Australia has got a lot of materials which we can do, can we process them and be part of the supply chain that way? Then go further up the line with mineral processing? So that might be our way of engaging with the industry,” offers the Chief Scientist.

“The next one is maybe there is an opportunity for us to have recyclability and design for recycling in mind for solar panels. So it’s looking at how might… we get an edge by having solar panels, which might be more expensive, but then they’ve got a recyclable aspect to them. And also you’re able, with the scope three in the Paris agreements that show you’re able go all the way through, that the carbon emissions are accounted for, and so you know exactly what you’re buying.”

As for a national semiconductor plan, Foley is unable to say much about a timeframe for delivery, or for any recommendations it would include.

Certain things are being considered, such as what the NSW Semiconductor Sector Service Bureau – established after the 2020 sector study to, among other things, link local companies to international foundries – might look like with a national focus, but her team is currently trying to get across the changing environment.

“At the moment what we’re doing is trying to understand what the situation is and what is the scope of what we want to put into such a report, and so we’re not yet at the point where we can say there’s a timetable, but [this] year, of course, it will be a focus,” explains Foley. “Because to build any industry, you’re talking about a decadal plan, at least. It’s not like you do it overnight.”

From:  https://www.aumanufacturing.com.au/rethinking-what-australia-can-and-should-do-in-silicon