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Second Interim Report
Clair Brown, Editor

11.2 The Development Process at JapanTech

At JapanTech, development of the business plan, which includes discussions from users on what will sell as well as production requirements, is an important process. The plan for memory is sent to the R&D division annually. The development process is conducted for two years by the central research lab, which undertakes research for all the divisions of the company (including semiconductor) and then by the development team for two years before it is handed off to the memory division. Central lab engineers produce fundamental research reports and then develop process architecture and modules (circuit design) based upon this research. Until last year, they also developed the engineering sample.

At JapanTech, the development and fabrication process are divided into three stages: research, development, and fabrication of the engineering sample. The development lab does the prototype development (including the study of new technologies, integration, and fabrication of a prototype.) A cooperative relationship exists between the central research lab and the development lab. Since the semiconductor division commissions research on future technology, it is in charge of the research plan, and funds and receives the research results. The development lab also does the engineering sample development (i.e., establish processes, confirms characteristics, completes and ships engineering samples to the engineering division). The engineering sample is then handed off to the business division, which makes the commercial sample, which is then transferred to the fab. The hand off to the fab is made at an early stage (e.g., 5 good chips per wafer). In a recent transfer, they needed over 1000 wafers to establish reliability. The biggest challenge is transferring technical know-how and understanding where equipment bottlenecks will be. The number and complexity of the modifications made decrease as the development progresses (e.g., in a recent generation, five to ten mask changes were made in the engineering sample, fewer than five changes were made in the commercial sample, and three to four minor mask changes were made at the first receiving fab.)

Daily technical reports during development of the prototype device total 2000 pages per device; there are far fewer reports during the engineering sample stage. In contrast, meetings for prompt exchange of information between engineers becomes more important the further they are into production. Process engineers communicate with production engineers weekly in the early stage and then daily in the last stage. JapanTech estimates that each stage costs approximately the same amount. Since development resources are limited, the strategic decision of what device to concentrate on is important. JapanTech is continually adjusting resources to research, development, and production.

Participation with equipment vendors appears controlled and contingent. When the product requires specialized nonstandard inputs from the supplier, or when the equipment is being tailored to the specific needs of JapanTech, participation with the equipment vendor is extensive. When these conditions are absent, there is relatively little participation. Once purchased, equipment performance is continuously monitored. Since equipment is not restricted to specific devices, one of the first decisions made is what equipment on hand would work for the device being developed and what equipment needs to be purchased. For the existing equipment chosen for continued use, production engineers make the equipment modifications for the new device. These modification projects give the equipment engineers the opportunity to work on a creative project.

JapanTech engineers have discussions with equipment manufacturers on how to reduce price, on what machine options to order, and on required safety requirements for machines, which differ by prefecture. Today they are more frank in discussions with equipment vendors than previously, since the "cost of hiding information is perceived to be too high". JapanTech’s openness with the equipment vendors (in contrast to USTech) reflects the widespread use of similar equipment throughout the memory sector and the decline in the price of equipment as modifications become standardized.

JapanTech has introduced a "total concept" approach to improve communications between engineers; design, process, and product engineers must work together to produce total concept through meetings and rotation. Discussions with equipment and materials manufacturers are also integrated into process. This is to structure more of a focus on innovation in product design, since the days of price competition and incremental improvements have been replaced by emphasis on innovative products. The "total concept" approach includes six months of education on the production line for junior development engineers before they specialize in engineering tasks. Half of new hires at the development lab have spent six months on the production line, and one-fifth of all development engineers have spent six months on the line.

Work Assignments and Knowledge Creation

The project leader assigns work and makes schedules according to abilities. Ideas are generated about technologies by team members. When a new idea is created by an individual, verification and evaluation of the idea is performed through fabrication by the test team, which decides the best choice for the new technology. In the final stage, however, there is no time to try ideas by making samples, so the leader chooses among competing ideas. The person whose idea is rejected is usually discouraged for a short time. The project leader tries to pick an idea as soon as possible and rejects other ideas right away, even if they are equally good. He will consider using the rejected idea in the next generation. Usually only small problems have many ideas for a solution; conflicts among important ideas do not occur frequently.

At the research and development stages, brainstorming meetings are held 2-3 times per month. With the chief engineer’s (kacho) help, engineers write up technical reports and patent applications, and the kacho distributes them.

In the development of the device we studied, only two major technologies were changed. To develop the two technologies, a team was appointed that consisted of the key person (shunin), plus five engineers for process development, plus three engineers for circuit design. The shunin learns about basic information from central lab members and about customer information from the memory division. The shunin’s supervisor (kacho) decides the main job targets for the shunin, who decides job assignments for members. The shunin also does a lot of training for the team.

JapanTech is typical of Japanese semiconductor companies by relying on the team (reported by seven-tenths of the engineers) with the supervisor’s input (one-fourth) for assigning job tasks, and by relying on the team to prioritize tasks and define technical problems (each reported by nine-tenths of the engineers). (Chart 11.1B.) Project specifications are usually written by the team (reported by eight-tenths of the engineers) as well as by individuals working alone (reported by six-tenths). Individuals are also heavily involved in setting deadlines on their own (half) as well as with the team (seven-tenths) and the supervisor (two-tens). Compared to the U.S., Japanese managers appear to be more involved in assigning tasks and less involved in setting deadlines. Teams appear to be more involved, and individuals less involved, in prioritizing tasks in Japan, and individuals are more involved in setting deadlines in Japan.

On-the-job development of skill level for engineers is intended to include development of originality and creativity. Job rotation is a major mechanism for skill development. The goal is to rotate the jobs of the group members yearly across devices and stage (e.g., year 1 in research on two generations out; year 2 in development of the next generation; year 3 fabrication of the engineering sample with 80% of time on the fab line of current generation device). For example, one group had 10-14 team members in development, 2-3 members (with none next year) in fabrication, and 4-5 members (growing to 5-7 next year) in research.

Japanese engineers would rather do research and development work than fabrication work, which is hard and hands on ("for an operator and not suitable for self"), and the breakthroughs and patents are mostly in research and development. However, the company believes that fabrication work has important educational aspects so engineers are required to work on fabrication.

JapanTech also uses the transfer of engineers to transfer knowledge. This is part of their policy of periodic job rotation between R&D, the business division, and the fabs. At the time of transfer, development engineers are sent to the manufacturing fab for one month. However, one to two engineers (process and design) are sent for two years from the production fab to the business unit fabricating the commercial sample. A number of engineers are sent to the volume fab for the hand-off. In the latest generation, the hand-off to the second high-volume fab six months later needed only one-tenth as many engineers as the original fab.

JapanTech recently implemented specific improvements in the transfer process; a 5% rotation between product and process engineering divisions and tracking of data for critical points in each process by product line (matrix of process by product line).

The source of ideas, which reflect the significance of learning from past experience, include (in order of importance):


1. journals, literature
2. previous JapanTech reports
3. customers: memory division and marketing engineers


1. previous JapanTech reports
2. problem information from product lines (particles, yields, defects)


1. discussion in team meetings; development engineer in team provides support.

Both Japanese and American engineers ranked colleagues within their company (by eight out of ten and nine out of ten, respectively) and journals and books (by six out of ten and five out of ten, respectively) as important/very important sources of technical information (Chart 11.2B). Conference presentations were ranked as important/very important by seven out of ten Japanese and American engineers. Patents were ranked important by one half of the Japanese engineers, and engineers at other companies were ranked important by six out of ten U.S. engineers. U.S. engineers were more likely than Japanese engineers to rank outsiders (i.e., engineers at other companies, equipment vendors and material suppliers) as important sources of technical information. Japanese engineers were more likely than U.S. engineers to use their team procedures and findings from previous projects (two times and .8 times per week, respectively) and both were less likely to use company documents on previous projects (1.1 times per week for Japanese engineers and .7 times for U.S. engineers).

For JapanTech’s development engineers, an important goal is to be one of the first companies to present a paper on the next generation memory device, which marks its public debut at the ISSCC international conference. The companies already know about individual processes before the presentations at the ISSCC conference, where they learn what the other companies are emphasizing and their general direction of development. However, companies do not present information about process integration at the ISSCC conference. Overall, the ISSCC is important for motivating engineers as well as for marketing and sales.

Compensation, Evaluation, and Incentive Systems

Like all large Japanese companies, a complex system is used to determine monthly salary, which is a combination of age pay plus grade and position pay. Until they reach management, which typically takes twelve or so years, engineers are in the company union. During this period, earnings are fairly rigidly set with only minor variations among engineers with the same education and tenure. Monthly salary and bonuses are negotiated with the union, and annual increases are determined by national wage negotiations in the spring (Shunto, or annual spring offensive.) Twice yearly, employees are paid a bonus (annual average of 5 months), with performance accounting for up to 25% of the bonus. Performance pay amounts to only a small fraction of regular salary with recognition being more important than money. However, performance affects one’s rate of promotion, especially to management, which begins with the position of kacho. All group leaders now become a kacho. However, with the aging of the work force, JapanTech is running into the problem of too many shunin, so more engineers must become technical specialists (tanta kacho). Currently, JapanTech is experimenting at the development lab with paying an annual salary based more on performance and less on experience and grade.

At JapanTech, an annual goal is 3 to 4 patents per engineer. About Y5000 is paid at the time of patent application and about Y10,000 is paid if accepted (license). In the infrequent case of a patent being used in the product line, a much bigger reward is paid (Y1,000,000). Patents in the development lab are mostly for process (80%, of which 70% is process only and 30% is equipment only) with the remaining 20% for circuit design. All equipment patents are connected to process development.

Like other large Japanese companies, JapanTech relies on company-based education for the development of its young engineers, who are hired after receiving a BS. Unlike their American counterparts in R&D, Japanese engineers usually do not have masters or doctoral degrees when they go to work for a company. They will often receive an advanced degree from their company or from an affiliation with a university while working for a company. JapanTech’s development lab has only 2 PhDs, one from a university and one from the company.

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