Does manufacturing test add value?

Does manufacturing test add value, or is it simply an unavoidable cost center? If the latter, it makes sense to drive the cost to an absolute minimum. If test adds value, though, it may be worth paying a little more for test if it adds a lot more value.

Rich Yerganian addresses this question for the semiconductor industry from his vantage point of nearly two decades at LTX, now LTX-Credence. In a blog post, he notes that business investment in computers and telecommunications infrastructure was the primary driver for semiconductor test equipment (STE) in the '80s and '90s, and the few wireless applications were mostly confined to the military market. Automotive electronics, he writes, was confined to the AM/FM radio.

He notes that the '80s and '90s also say the evolution of testers from a shared-resource architecture to a per-pin architecture, with increasing performance and throughput driving tester costs into the multiple millions. In 1999, the ITRS suggested high-speed digital-device testers could cost $20 million per copy.

Such a cost structure became completely untenable with the shift to consumer applications. As Yerganian puts it, “The good news behind this shift was that with the advent of the cell phones, the internet and other consumer applications, volumes for semiconductors, and accordingly semiconductor testers, experienced strong growth. The bad news was this shift put our industry in the cross hairs of our customers wanting faster, better, less expensive testers….”

This brings Yerganian back to the value-add vs. cost-center question. For many years, test-equipment vendors tried to drive the value-add message to customers who insisted on considering test a cost center.

Does the answer to the question really matter, or is it just an issue of semantics? According to Yerganian, “When you fully embrace the concept that your customers view you as a cost center it fundamentally changes your approach to product development. You direct your R&D teams to not only use innovation as a way to develop new capabilities or performance improvements, but also as a tool to do so while delivering products at lower price points while improving product reliability.”

That's the approach LTX-Credence engineers took in developing the recently introduced Nighthawk_CT RF tester.