Meaning
Contractual commitments by a semiconductor foundry to achieve a minimum percentage of working chips on each wafer protect the customer from paying for wasted production runs. Agreeing to a yield threshold guarantee ensures that the supplier must pay for the lost wafers or replace them if the number of working chips falls below the agreed level. This arrangement helps the buyer manage their production costs by sharing the financial risk of manufacturing issues with the foundry.
It is a standard feature in agreements for custom chip manufacturing.
Yield Calculation
Measurement of the working chips is done during the wafer sort phase before the wafer is cut into individual dies. The results are compared to the agreed percentage to see if the batch has met the required standard. This check must be done using testing processes that both parties have approved.
Financial Remedy
Credit or replacement wafers must be provided by the foundry if the yield falls below the guaranteed level. The agreement specifies the exact formula used to calculate the value of the credit based on the number of missing chips. This remedy ensures that the buyer does not have to pay the full price for a batch that has a high rate of defects.
Production Boundary
Exclusions are included in the agreement to protect the foundry if the low yields are caused by problems with the customer’s design. If the design has not been fully optimized, the guarantee may not apply until the layout is corrected. This limit ensures that the foundry is only held responsible for issues that occur during the manufacturing process itself.
