Bruce Kim of SurplusGLOBAL: The Impact of the CHIPS Act on the Secondary Equipment Market

In this episode, Françoise von Trapp speaks with Bruce Kim, of SurplusGLOBAL, for an update on the semiconductor secondary equipment market, and how the US. and European Chips Acts are impacting it. 

They also discuss the trend of top-tier OEMS prioritizing the development of innovative technology rather than investing in legacy tools that are still very much in need, and the impact this is having on device manufacturers that rely on legacy tools, but have trouble finding repair parts. This was part of an interview with Bruce by WorldFolio. Find the complete article here. 
 
You’ll learn how SurplusGLOBAL is building a global parts platform that helps legacy tool owners find parts, and also manufactures replacement parts for those that have become obsolete. You’ll also learn how AI is helping to optimize this business. You’ll also hear about the 2030 Big Cluster Project, the company’s global expansion in semiconductor manufacturing hot spots around the globe, and more. 

Contact Bruce Kim on LinkedIn

SurplusGLOBAL
SurplusGLOBAL is one of the largest one-stop platforms for pre-owned semiconductor equipment.

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Transcript

Hi everyone. If you've been listening to the podcast for a while, you may remember an interview with Bruce Kim and Rose Lee from SurplusGLOBAL about the critical role secondary equipment and parts play in the semiconductor manufacturing ecosystem. Now, at that time, the company had just introduced its global parts platform to help address the demand for replacement parts to extend the life of secondary equipment and provide sustainable solutions for legacy node fabs whose semiconductor devices are still very much in demand.

 So a year's gone by and Bruce is back to update us on the progress and the expansion of this parts business and how the company is using AI, that's artificial intelligence, to transform it. Welcome back to the podcast, Bruce.

00:00:46 Bruce Kim:
Thank you for this opportunity and it's great to talk to you again.

00:00:52 Francoise:
Well, it's nice to have you here again. Actually, I think this is the third time you've been on the podcast. We seem to be doing this once a year. So for those who may not have listened to last year's episode, can you explain a little bit about yourself and your role at SurplusGLOBAL?

00:01:08 Bruce Kim:
Sure, I'm Bruce Kim, CEO of SurplusGLOBAL. I founded SurplusGLOBAL 24 years ago. SurplusGLOBAL has been contributing to the ecosystem of legacy semiconductor equipment and parts for the last 24 years.

00:01:23 Bruce Kim:
We are the largest player of secondary equipment and parts solutions, having sold more than 60,000 semiconductor equipment to over 6,000 customers globally.

00:01:38 Francoise:
Wow.

00:01:39 Bruce Kim:
We contributed a lot, as well as to carbon reduction.

00:01:45 Francoise:
Since we last spoke, there's been a distribution of CHIPS Act funding in the U.S. and in Europe, and this is leading to massive manufacturing expansion and supply chain shifts as regions focus on reshoring their manufacturing. How is this impacting the demand for secondary semiconductor equipment and parts?

00:02:06 Bruce Kim:
These days we see more demand from the U.S. and Europe, and we expect more sales opportunities from Europe and U.S. side. 
Additionally, we are considering expanding our physical presence in the U.S. and Europe and setting up clusters for secondary and legacy equipment solutions, especially in the Austin area and Dresden area, to provide more legacy solutions.

00:02:47 Francoise:
So you currently have a cluster set up in Seoul, Korea, correct?

00:02:52 Bruce Kim:
Yes, that's correct.

00:02:53 Francoise:
OK, so you want to recreate the same thing in the U.S. and in Germany?

00:03:01 Bruce Kim:
Yes, in the near future, but not today. We have had meetings with relevant government officials.

00:03:08 Francoise:
So where in the U.S. are you looking to expand?

00:03:13 Bruce Kim:
Our number one target area would be Austin or Tyler, and also the Phoenix area. Currently, we are still in discussions with government officials and other stakeholders.

00:03:32 Francoise:
So you're saying the situation varies from region to region? Are you seeing more demand in Europe because of legacy tools?

00:03:43 Bruce Kim:
Yes, that's right.

00:03:45 Francoise:
You were recently interviewed by World Folio, and you mentioned in the article that many of the world's top five OEMs prioritize the development of innovative technology rather than investing in legacy tools that are still very much in need. Can you talk a little bit about that?

00:04:01 Bruce Kim:
Yes, actually we are under discussion with giant fabs and global top-tier fabs to provide legacy solutions if those customers are having difficulties in finding obsolete parts, lack of engineers, or upgrading legacy equipment. Major OEMs are not so much interested in this business area. There are more than 1,000 refurbishers in the world. These refurbishers provide legacy solutions for equipment and parts, but they mainly focus locally. For example, we can import guidance solutions to Korea or export U.S. solutions to Europe. So, someone needs to integrate these local solutions globally, and we are pursuing that kind of global integration for legacy parts and equipment.

00:05:10 Francoise:
So no one is really investing in developing new 200mm tools for legacy node processes. If that's the case, how long can we expect the tools that are out there to last? I mean, you can only refurbish them so many times, right?

00:05:25 Bruce Kim:
AMAT, LAM research or ASML are pursuading to provide new solutions for legacy semiconductor equipment area. On the other hand, some companies adopt the those equipment but smaller size of end users globally they think price is too much expensive. Engineers resources of major OEM for legacy system is not enough. Many experienced engineers are retired now and even AMAT, LAM, KLA or TEL have difficulties in lack of resources to support the legacy system. 

1,000 refurbisher are still supporting those area, 6 inch area and mainly supported by local refurbishers. SurplusGLOBAL can provide more Integration to customers. Major large companies would like to cooperate with SurplusGLOBAL and we are under discussion with Samsung, Intel, SKHynix and so on.

00:07:13 Francoise:
And they're interested in legacy tools?

00:07:19 Bruce Kim:
Yes, both equipment and parts. They have difficulties to purchasing some obsolete parts.

00:07:29 Francoise:
OK.

00:07:30 Bruce Kim:
Sometimes we source obsolete parts globally, or we develop brand new solutions for legacy parts.

00:07:40 Francoise:
So they're coming to you for parts to keep their systems going?

00:07:46 Bruce Kim:
Yes, that's correct.

00:07:46 Francoise:
They're not necessarily looking for new secondary equipment at this point. They're coming to you because you're providing the parts.

00:07:54 Bruce Kim:
Yes, exactly.

00:07:55 Francoise:
To continue refurbishing the ones that are already on site.

00:07:59 Bruce Kim:
Yes, indeed.

00:08:00 Francoise:
In some cases, you're actually building new parts and innovating new solutions.

00:08:08 Bruce Kim:
Yes, we have lots of discussions with major OEMs to build ecosystems and are under discussion about partnering, outsourcing refurbishment, equipment & parts logistics services. They want us to develop some obsolete parts by reverse engineering. 

00:08:52 Francoise:
OK. So the companies that you've been talking about provide mostly front-end process equipment. So there's a big focus now on the advanced packaging segment of the industry. Are you seeing a similar situation in the advanced packaging space?

00:09:07 Bruce Kim:
We see an increase in demand in 3D packaging areas, but not significantly yet. However, within a few years, the demand is likely to grow much larger in the 3D packaging sector. Their design rules are not very strict, so many 3D packaging companies, especially OSAT, are seriously considering purchasing legacy semiconductor equipment.

00:09:32 Francoise:
Last year, we talked about the global parts platform that you established to address some of the challenges we've been discussing. Can you update us on the progress of that program?

00:09:44 Bruce Kim:
This year we started two projects: firstly, Parts Mall. Parts mall is like a big shopping center. Currently, our pats mall shopping center is 1,000m2 size, but soon or later we will expand to 14,000m2. 

00:10:16 Francoise:
Is it a physical space or online?

00:10:19 Bruce Kim:
It is a physical space. We are building in Korea firstly, and then we want to build this in other regions including in U.S. and Europe. Secondly, we also started to building new marketplace, currently there are not enough solutions for online trading. eBay is leading that market and many of parts marketplace provides trading solutions. But our view is those kinds of solutions can not meet customers requirements. So we are building more certificated, and deliciated online marketplace, specializing in parts trading services. 

00:11:02 Bruce Kim:
We aim to complete the SemiMarket project by the middle of next year, and then further expand our services.