While the chip shortages of the pandemic era may be over for now, it is clear that the semiconductor industry will continue to face challenges due to rigid supply chains, the high cost of capacity and evolving geopolitical tides that shape global trade.

As we’ve seen over the last few years, the ripple effects of disruptions to global chip production are exponential in nature. Indeed, one study by researchers at MIT found that a 10-day delay in production at one fabrication center (fab) could result in a 12-month disruption to downstream supply chains.

Yet the reality is that disruptions to production happen all the time. A tool may go down, requiring a new part or replacement of the entire system. With most chips in use today, manufactured on mature nodes, finding a replacement part (or whole) for machines that may no longer be in production themselves is challenging, to say the least.

As a 2021 Congressional Research Service report stated, “equipment to make 200-mm chips is no longer readily available” and “firms are hesitant to make new investments in fabs making ‘old’ chips, which can only achieve the required profit margins if produced on depreciated equipment.” These dynamics could lead to more chip shortages in the mid- to long-term, as an investment in 200-mm fabs will not be enough to meet the demand for older chips.

To state the problem succinctly: The equipment required to produce the majority of chips we rely on globally is both hard to find and often too expensive to buy new. However, on the flip side, it is common practice for big semiconductor manufacturers to invest in tools with decades-long lifespans, use them for two to five years and then retire them to warehouses, where they sit idle. This is to say, the supply of semiconductor manufacturing equipment used to produce legacy and current technologies exists, but it needs to be brought online.

Historically, the resale market for semiconductor equipment has been fragmented: Six-figure transactions have occurred largely offline, with little data and even fewer guarantees—that is, if they occurred at all.

In the past, the secondary market for semiconductor manufacturing equipment has been estimated to be about 5% to 10% of the primary equipment market. However, this number largely underestimates the supply and demand that could be transacted fab to fab if there was a secure, efficient way of doing so.

Indeed, in a survey we conducted last year, 57% of the 80 respondents indicated they would be willing to sell equipment no longer in use to another fab, and 43% indicated they would likely increase the procurement budget allocated to pre-owned equipment in the future. In another poll we conducted this month, a whopping 81% of the 176 industry respondents agreed that reliability is a top barrier to buying secondhand semiconductor equipment.

It is clear that a unified global resale market for chip-manufacturing equipment is neither supply- nor demand-challenged. Instead, the unique challenges to overcome to add flexibility to the capital equipment supply chain involve trust, transparency and efficiency.

For manufacturers looking to buy used equipment, there needs to be a reliable process to ensure equipment arrives in the condition expected, when expected and in compliance with global trade regulations. For fabs deciding whether to scrap, harvest or sell equipment, better data on the true market value of used equipment and an efficient channel for offloading it would help pave the way for more fab-to-fab recirculation of equipment.

Moov Technologies CEO Steven Zhou speaks at the opening of Moov’s new headquarters, in Tempe, Arizona, in June.

At least, these have been our hypotheses at Moov, a global marketplace for used chipmaking equipment founded in 2017. Today, we host more than $4 billion in available assets. I believe our success in growing Moov over the past six years has been due to the mechanisms we’ve established to earn the trust of semiconductor manufacturers. These mechanisms include secure transactions, buyer and seller validation, comparative pricing data, digital equipment inspection, real-time logistics tracking and compliance support.

Most recently, we announced an expansion to our money-back–guarantee program that lets fabs that buy equipment return it within 30 days for a full refund, no questions asked, if it does not meet their specifications.

Our goal here is to expand the secondary market as a viable procurement and disposition strategy.

A global secondary market for semiconductor manufacturing equipment adds much-needed liquidity to these high-value assets. This market will help reduce the barrier to expanding capacity, especially for small and mid-sized manufacturers, create more flexibility to react to changing demand and create a more environmentally sustainable chipmaking industry by recirculating tooling that may otherwise idly consume energy or become e-waste.

By: DocMemory
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