Data explosion driving demand for Japanese company that moves chips in factories

For close to four decades, one Japanese company has been trusted to move silicon wafers around the factories of the world’s biggest chip manufacturers.

Now it is going back to the drawing board and redesigning its ubiquitous overhead conveyors to handle an exponential surge in data use and global chip demand.

Daifuku has, over its 85 years in business, gone from ferrying documents between offices and hospital wards to handling the world’s most delicate microelectronics, making the conveyor belts and boxes that zip across the ceilings of modern semiconductor plants.

“Our system is like blood vessels connecting all the important organs” and will need to handle that explosion in demand. The company stockpiled materials at the start of the pandemic, but may face challenges if global supply shortages intensify or prolong, he said.

The 63-year-old’s remarks underscore the bullishness of global chip-manufacturing leaders such as Intel and Taiwan Semiconductor Manufacturing (TSMC), which have been spending unprecedented sums of money to capture a wave of new demand from industries such as electric vehicles, connected home devices and internet servers.

Between them, the two companies have committed to spending about $70 billion on new manufacturing equipment and facilities this year. Intel announced two giant new chipmaking campuses — one in Ohio and another in Germany — in recent months, as it joins rivals in preparing for a doubling of the $550bn industry over the next decade.

At the heart of that impending explosion will be Osaka-based Daifuku, founded in 1937 as a maker of forging machines before scoring its first big break 20 years later when Toyota Motor came calling.

Today, analysts say its systems power everything from Amazon.com fulfilment centres to the plants of Intel and TSMC.

Its factory conveyance systems are among the world’s most sophisticated. Its overhead vehicles are powered wirelessly and can cover 320 metres in a minute without shaking or disturbing their contents. A routing system aided by artificial intelligence helps plot paths for hundreds of containers across a complex intertwined network without creating a jam.

Daifuku’s closest rival is Muratec Automation, and together they have become critical in the manufacturing of most chips, from basic microcontroller units to the most advanced semiconductors in servers, laptops and game consoles, said Tokyo-based Bain & Co partner Jean-Philippe Biragnet.

Their systems and other highly automated processes mean “human hands never touch the product and humans are really only there to maintain the tools”.

“There are no competitors that can match Daifuku when it comes to speed in meeting customer requests for production lines,” said Omdia analyst Akira Minamikawa.

The company’s long track record has “built a high level of trust and confidence among semiconductor makers. In chipmaking, minimising travel time between processes is key to maximising output”.

While Mr Geshiro declined to disclose the names of his customers, SMBC Nikko Securities analyst Satoshi Taninaka wrote in a report this month that Daifuku’s transport system is used in almost every factory making chips with the most advanced fabrication processes of 7nm and smaller.

Mr Geshiro, who joined Daifuku a year before it got into chipmaking in 1984, sees demand for its transports expanding to include the so-called back-end of chip manufacturing — which features heavier, less sensitive loads. This push has been driven in part by the increasing adoption of stacked-chip manufacturing techniques that put more silicon into every module. Daifuku’s current systems carry loads of about 20kg, but customers have been asking for systems that can work with loads between 70kg and 100kg and the company is developing new rails and carriers to handle such weight.

The entire transport system for a given fab (manufacturing plant) is less costly than a single unit of the most advanced semiconductor-making machines, but Mr Geshiro considers his machinery every bit as essential to the final product. Chipmaker fabs are more demanding than other industries, the chief executive said, asking for installations to be completed in half the time that others, such as auto makers, would allow.

“There won’t be a day when semiconductor makers will be completely satisfied with what we offer because they constantly ask us for more,” he said.