dec 07 update

Advanced Micro Devices (AMD) is warming to the idea of building a chip manufacturing plant in India, which would be a significant breakthrough for the country's high-tech ambitions.

Several of the world's top chip vendors, including AMD, Intel and Texas Instruments, have set up chip design facilities in India. But the country does not yet have a state of the art chip manufacturing plant. Intel said earlier this year it had decided against setting up such a plant, because the Indian government was slow to articulate its policies for the semiconductor industry.

Hector Ruiz, AMD's chairman and CEO, was in India to announce the opening of a new, 52,000 square-foot AMD design facility in Bangalore that will house up to 350 engineers. The company has outgrown its previous design facility, which opened in 2004.

AMD's chip production efforts in India have been limited so far to its involvement with SemIndia Inc., a consortium of investors that plans to set up a wafer fabrication, and assembly and test operation in India.

AMD said in 2005 that it would transfer some of its manufacturing process technologies to SemIndia, but that project has been delayed, in part because the Indian government was slow to announce its semiconductor policy and a package of incentives for the chip industry. Both were finally announced earlier this year.

The partnership with SemIndia will help AMD to test the waters in India and better understand its regulations and policies, Ruiz said. The company will continue to work with SemIndia before making a final decision as to whether to set up its own fab, he said.

Along with the design operations in Bangalore, AMD also has a design facility in neighboring Hyderabad, which became part of the company when it acquired ATI Technologies last year. AMD will continue to increase the number of design engineers it has in India, Ruiz said.

$46 Million Investment will Boost Mitsubishi Production of 2-inch GaN Wafers

Mitsubishi Chemical Corporation is seeking to establish itself as a commercial-volume supplier of GaN substrates, with a 10-fold production capacity expansion. The new equipment at the company's Tsukuba plant will produce one thousand 2-inch wafers per month when complete and commissioned.

Alongside the wafer expansion, the chemical arm of the Japanese conglomerate is also seeking to double the production of its red and green phosphors. In total the expansion will cost ¥5 billion ($46 million) and should generate ¥10-15 billion in sales per year from 2008 onwards.

General Manager of Mitsubishi Chemical's optoelectronics division said the money would be spent on specially-built equipment for the company’s GaN production processes. The new facilities will build on knowledge gained from the company's existing growth tools, from which it began shipping samples in 2005.

Although there is currently great interest in the company's m-plane GaN substrates, until recently high defect densities in these substrates had kept IQEs down. But Mitsubishi Chemical has been able to provide material that appears free of dislocations by transmission electron microscopy. Consequently, groups from fellow Japanese company Rohm and the University of California, Santa Barbara have been able to improve light emission in LEDs and produce the first blue lasers on non-polar GaN.

Silicon Border and Grupo Maiz Sign Agreement to Build Science Park

Silicon Border Development and Grupo Maiz announced their partnership for design and construction of Silicon Border Science Park. This partnership solidifies an award winning team which includes Silicon Border Development’s financial and development Partner, ING Clarion. The Science Park will be designed to attract capital-intensive, leading-edge manufacturing operations for semiconductors, flat panel displays, solar panels, and biotechnology products. This Science Park, located in Mexicali, Baja California, Mexico will be modeled after science parks in Asia and is expected to be the first of its kind in North America. The border location enables the cost structure to be competitive with those in Asia, including China, Malaysia, Singapore and Taiwan.

As a result of the partnership, Grupo Maiz will be Silicon Border Development’s preferred contractor to design and manage the physical attributes of the Silicon Border Science Park. This includes electrical power distribution, water treatment, waste treatment, streets, sidewalks and storm drains all constructed to electronic industry standard. The parks total investment for these items will exceed $150 million. Maiz is also the preferred contractor Silicon Border Development will recommend to its customers. The initial fixed contract was signed by both companies on November 8th and will include the initial streets and infrastructure for Phase I which is expected to begin immediately. D.J. Hill, Chairman and CEO of Silicon Border stated, “We are very excited to have Grupo Maiz join us as our construction contractor. As one of the largest industrial park construction firms in Mexico, they bring World Class performance and expertise in the development of industrial parks in Mexico.” Grupo Maiz is based in Monterrey, Nueva Leon, Mexico.

About Silicon Border

Silicon Border is a 10,000-acre high-technology science park catering to the specialized needs of the semiconductor process technology and other capital-intensive technology sectors. Planned for development along the U.S.-Mexico border in Mexicali, Silicon Border enables a cost-effective and competitive manufacturing alternative in North America for emerging and global companies. Improving upon the world’s leading technology parks, the park’s 15 square miles of world-class infrastructure and education will support the stringent requirements of the semiconductor, flat panel display, solar, aerospace and biotechnology industries.

About Grupo Maiz

Grupo Maiz provides companies in Mexico and Latin America with world-class services in the construction industry. Grupo Maiz is formed by four companies: Maiz Edificaciones (Construction), Maiz Proyectos (Design and Engineering), Maiz Maquinaria Pesada (Machinery) and Las Palmas Business Park. Maiz Edificaciones takes the lead in turning client ideas and designs into realities by means of several specialized construction services. Maiz Edificaciones has extensive installed capacity to execute projects of any size, with the unique quality and service that made our company famous. Since the early 1960s, Maiz Edificaciones has relied upon internal engineering functions for the development of project plans and specifications. In 1988, Maiz Proyectos was launched as an independent business unit, allowing it greater freedom to develop new technologies and infrastructure to meet client needs. Today, Maiz Proyectos and Edificaciones, working in tandem, can meet 100 percent of your building development needs including design and construction of industrial buildings, shopping centers, data centers, wastewater treatment plants, infrastructure and special facilities.

About ING Clarion

Founded in 1982, ING Clarion and its affiliates manage more than $45 billion in assets in the private equity, public equity, and public debt sectors of the real estate markets. Headquartered in New York, the ING Clarion organization has more than 600 employees located in major markets throughout the United States. The firm is the U.S. investment management arm of ING Real Estate an international real estate company, active in real estate investment management, development and finance. The company ranks among the world’s strongest real estate players with offices in 21 countries in Europe, the United States, Asia and Australia. ING Real Estate is part of ING Group, a global financial institution of Dutch origin offering banking, insurance and asset management to over 60 million private, corporate and institutional clients in more than 50 countries. With a diverse workforce of about 120,000 people, ING comprises a broad spectrum of prominent companies that increasingly serve their clients under the ING brand.

FATC Preps Third Plant for DRAM Production

Despite a persistent soft DRAM market, Formosa Advanced Technologies Company (FATC) is preparing its third plant to meet buoyant demand from Nanya Technology and Inotera Memories, two companies which both have ties with FATC's parent company, Formosa Plastics Group, according to company executives.

Chairman Wen-Yuan Wong admitted that present DRAM average selling prices (ASPs) have dropped below cost, resulting in enlarging losses at makers. Amid the severe price environment, DRAM makers are inevitably requesting lower quotes from their backend suppliers, he added. But he also noted that FATC is well-prepared for these sorts of requests, noting that backend players sometimes have to be prepared to help out their customers when they are facing a stiff environment. DRAM backend production demand from Nanya Technology and Inotera Memories is continuing to grow despite the current poor market conditions. Both DRAM makers have been continuing to expand their capacity while making progress towards migrating to a 70nm processing node during the second half of 2007, Wong noted. As Nanya's Fab 3 ramps up capacity, corresponding backend subcontract orders at FATC are also growing, he said.

Driven by demand from these major customers, FATC is speeding up its construction schedule of the third plant with the fab shell already having completed construction. Clean room equipment installation should be completed by year-end 2007 with production slated to begin in the first quarter of 2008, Wong detailed.

Citing experience from its second fab, FATC should have its third plant running at full capacity in about one year's time, said company spokesperson Solomon Chang. FATC's second plant started production in 2006 and will begin running at full capacity in late 2007 or early 2008. Current utilization rate at the second fab is about 80 percent, Chang said.

Besides focusing on DRAM backend production, FATC said it will also explore opportunities for microSD production in the future. Additionally, multi-chip packaging (MCP), stack-die packaging, system-in-package (SiP) and flip-chip (FC) packaging are all listed as items for future development.

FATC guided that its sales in 2007 should hit NT$9 billion (US$277.4 million), representing an on-year growth of 30-40 percent. Earnings per share (EPS) are expected to be NT$4-4.4. The company foresees annual sales will grow by more than 30 percent in 2008 to about NT$12 billion, said company general manager Shih-Ming Hsie. Planned capital expenditure (capex) for 2008 will be NT$4-5 billion, he added.

China's SMIC Licenses Chip Technology from IBM

China's Semiconductor Manufacturing International Corp will license sophisticated chip-making technology from International Business Machines. The 45-nanometre bulk complementary metal-oxide-semiconductor (CMOS) technology will help SMIC upgrade production at its 300-millimetre wafer fabrication facilities, SMIC spokesman Matthew Szymanski said in a statement.

The technology can be used to make mobile devices such as handsets integrated with 3G, multimedia and graphics chips.

A source familiar with the deal told Reuters that the licensing agreement, which was consistent with U.S. export control and technology transfer rules, created a platform for possible future cooperation among IBM's partners in China's electronics market.

Shanghai-headquartered SMIC, the largest semiconductor foundry in China, said earlier this month it had invested $450 million in its new 300mm wafer plant in Shanghai, where pilot production has started. It owns or operates a range of other production facilities around the country.

Cypress to Shutter Texas Fab

Continuing on its fab-lite and cost-cutting strategies, Cypress Semiconductor Corp. is shutting down its wafer fab in Texas.

Cypress will ''exit'' its Fab 2 semiconductor manufacturing facility in Round Rock, Texas by late 2008. It will transfer production to its 200-mm Minnesota fab and outside foundries. There is no word about layoffs at the 6-inch, 0.35-micron plant in Texas.

''Fab 2 is a very efficient and well-run operation but the factory is small and runs older 0.35 micron process technologies," said Shahin Sharifzadeh, executive vice president of manufacturing at Cypress. "All of our newer products are being designed on more advanced process technologies, so it is simply more cost effective for us to shift manufacturing elsewhere than to retool Fab 2."

The Texas fab was expanded to 32,000 square feet in 1999 and currently employs 245 people. In recent years, the site has been building legacy USB, programmable logic, timing and communications devices on six-inch wafers.

The move had been somewhat expected. In March, Cypress said it was considering selling its U.S. fabs. Then, at the time, Cypress sought to clarify its current position on its fab strategy, saying it continues to invest in a 200-mm fab in Minnesota while "exploring options" for the older 150-mm fab in Texas.

Meanwhile, Cypress has several foundry partners. Recently, it license its 0.13-micron SONOS (Silicon Oxide Nitride Oxide Silicon) embedded nonvolatile memory technology to foundry Shanghai Hua Hong NEC.

Cypress has also inked other licensing arrangements with Asian foundries, including a 2005 deal with Shanghai-based Grace Semiconductor to shift its 0.13-micron process to Grace.

Taking another step back from the manufacturing game, Cypress earlier this year signed foundry United Microelectronics Corp. to produce its advanced SRAMs, the first of which will be made on a 65-nanometer process.

Thanks to solar, Cypress reported strong results in the third period. In fact, the company's solar-cell unit, SunPower Corp., represents some half of its total sales right now.

But Cypress has been on a major cost-cutting program in an effort to focus on its system-on-a-chip, solar and other lines.

In early 2006, Cypress exited the search-engine chip business, selling the assets to NetLogic Microsystems Inc. The deal was worth up to $70 million. Then, amid rumors about a leveraged buyout last year, Cypress in 2006 spun out its PC clock business into a new and independent company. Earlier this year, Cypress sold its auto image sensor unit, SMaL Camera Technologies Inc., to Sensata Technologies Inc. In March, Cypress completed the sale of its Silicon Valley Technology Center (SVTC), which has been established as an independent company. SVTC is an R&D foundry.

In May, Cypress exited the market for pseudo SRAM, selling off the business to Taiwan's Elite Semiconductor Memory Technology Inc. for an undisclosed sum.

In a move toward "labless engineering," Presto Engineering Inc. in July acquired a test facility from Cypress. The acquisition will enable Presto to provide product-engineering services to Cypress and other semiconductor manufacturers.

Toshiba and IBM Extend Semiconductor Research and Development Collaboration

IBM and Toshiba Corporation today announced that they have entered into a joint development agreement on 32nm bulk complementary metal oxide semiconductor (CMOS) process technology.

Since December 2005, IBM and Toshiba have collaborated on fundamental advanced research related to semiconductor process technologies at the 32nm technology generation and beyond at the research facilities in Yorktown and Albany, New York. Building on the success of this ongoing research collaboration, the two companies have agreed to extend the scope of the joint development work to now include 32nm bulk CMOS process technology.

Under the new agreement, Toshiba joins a six company IBM Alliance for 32nm bulk CMOS process technology development based in East Fishkill, New York.

Through this collaboration IBM and Toshiba plan to accelerate development of next-generation technology to achieve high-performance, energy-efficient chips at the 32nm process level, and to enhance the companies' leadership in the global semiconductor industry.

Three Firms Apply Under India's Fab Policy

Three companies have so far formally applied, while more than a dozen other firms have made enquiries in order to take advantage of the India semiconductor and electronics manufacturing policy announced earlier this year, a top government official has said.

Of the three that have applied, indigenous storage device manufacturer Moser Baer plans to manufacture solar photovoltaic cells and modules, while Titan Energy Systems plans to start with solar cells and modules and later on, get into the manufacture of wafers and poly-silicon.

The third applicant, Videocon Industries Ltd., proposes to set up a unit to manufacture LCD panels, and the investments planned by the three companies is about $5 billion, the official said. Investments of such a scale to manufacture any kind of electronics and related items are unprecedented in Indian industrial history, though, strangely enough, none of the companies that have announced plans to manufacture semiconductors in the country figure on the list so far. The enquiries have come from some of the biggest industrial houses in India, such as the Tata Group, Reliance Industries and others such as Suzlon Energy — and Solar Semiconductor.

All the investment proposals are to be evaluated by an appraisal committee set up by the ministry and headed by Nambiar. The concessions and subsidies are to be offered on a first-come first-served basis and only the first two or three applications that are cleared will be eligible for the various benefits on offer, the government has previously said.

The federal government had announced a capital subsidy for investors setting up semiconductor manufacturing units of an incentive of 20 per cent of the capital expenditure during the first 10 years for those manufacturing plants that come up in the special economic zones and 25 per cent of the capital expenditure for those located in non-SEZ regions.

In order to encourage local manufacturing of high technology electronics, the federal government had in February announced benefits for companies that intend to set up facilities to manufacture plasma display panels, liquid crystal displays, organic light emitting diodes, photovoltaic cells, storage devices, solar cells and micro and nano- technology products, including for the assembly and testing of these products. The guidelines to apply for benefits under the policy were however announced only three months ago.

Memsic Has Facility in China

Memsic, a semiconductor company with manufacturing facilities in China, closed at $10.25 a share, up from its IPO price of $10. It sold six million shares at a price slightly below its expected range of $11 to $13 a share, which was set by underwriter Citigroup Inc. Founded in 1999, Memsic specializes in semiconductors used in accelerometer products that measure tilt, shock and vibration; they are used in everything from mobile phones to auto-safety systems. While it is based in Andover, Mass., where it also does research and development, Memsic has engineering and manufacturing facilities in Wuxi, China, where costs are lower and the market for mobile phones and consumer electronics is expanding.

In the first three quarters of the year, Memsic's net sales doubled to $18.8 million and its net income rose nearly sixfold to $4.7 million, compared with the period in 2006.

Cypress Semiconductor Opens Shanghai Facility

Cypress Semiconductor Corp. has established a new China business operation that will serve as the centerpiece for its Asia design, manufacturing, sales, and marketing operations. With the opening of the new office in Shanghai, China, Cypress also relocated executive vice president of manufacturing and China operations, Shahin Sharifzadeh, who moves from the U.S. to serve in the same capacity at the new site.

The new site will be the focal point of Cypress's China expansion, which has included the opening of sales and marketing offices in Hong Kong and Shenzhen in recent years and the ramp-up of device production at Grace Semiconductor Manufacturing Corp. in Shanghai.

Cypress plans to double the size of its Chinese workforce in the coming years, with the majority of new employees in sales, design, and operations. The company is also expected to add employees in technology and manufacturing to oversee its flexible fab operations.

On Semi to Buy AMI for $915 Million

On Semiconductor Corp. is set to acquire AMIS Holdings, Inc. in an all-stock transaction valued at approximately $915 million. The combined company has cumulative revenues from the last twelve months of more than $2 billion and earning before tax, depreciation and amortization of more than $500 million.

On Semi also announced a 20 million share increase to its stock repurchase program. The transaction is expected to result in cost savings from economies of scale and enhance On Semi's position in analog and power ICs.

Samsung Factory to Reach 20 Percent Capacity

Samsung Austin Semiconductor started shipping flash memory chips to customers from its new $3.5 billion factory.

Samsung spokesman Bill Cryer said the first products produced in the factory, called Fab 2, are 16-gigabit flash chips that could be used in a variety of consumer devices, including portable music players and memory sticks. Unlike computer memories, flash chips retain their information even when electrical current to the chips is turned off.

The factory, which makes chips from silicon wafers that are 300 millimeters (about 12 inches) in diameter, is expected to reach 20 percent of its full production capacity by early next year.

The company's other Austin factory, completed in 1997, makes computer memories, known as dynamic random access memories, or DRAMs.

Samsung, the world's largest maker of memory chips, employs about 1,900 people in Austin. Its factories here are the only chip production facilities the company operates outside of South Korea.

Samsung says the Austin chips contain features as small as 51 nanometers, which is about 1/200th the diameter of a red blood cell.

Additional 20,000 Square Feet Increases Production and Test Capacity for STATS

STATS ChipPAC Ltd. a leading independent semiconductor test and advanced packaging service provider has expanded the production floor in its Ulu Klang Free Trade Zone plant in Kuala Lumpur, Malaysia. The Company has converted approximately 20,000 square feet of office space into additional production floor space, increasing the total manufacturing floor space to 230,000 square feet. The overall size of the STATS ChipPAC Malaysia facility is 488,000 square feet.

STATS ChipPAC Malaysia offers high volume, low cost turnkey solutions including assembly, test and distribution. The Malaysia facility is the primary site for STATS ChipPAC's Quad Flat No-Lead (QFN) manufacturing. In addition to the floor space expansion, STATS ChipPAC Malaysia has been rapidly building its QFN capacity, investing approximately $140 million since 2004, with an additional $25 million planned in 2008 to expand its QFN packaging and Radio Frequency (RF) test capabilities.

This expansion complements STATS ChipPAC's strategy to build its portfolio of advanced technology offerings by focusing on areas with long term growth such as QFN packaging and RF test. Revenue at the Malaysia factory has increased approximately 24 percent from 2005 to 2007 as a result of its expanded QFN manufacturing and RF test operations.

Sematech to Sell Chip Facility

In a move that reshapes part of the high-tech landscape in Texas, the Sematech research consortium agreed to sell its semiconductor fabrication plant in Southeast Austin. The new owner, a Silicon Valley firm, is expected to upgrade an already highly advanced facility that creates chip prototypes for customers and develops cutting-edge technologies for chip manufacturing.

The deal is expected to create revenue and jobs for the plant on Montopolis Drive, which employs almost 200 people. That could help offset Sematech's plans to move some of its research operations and dozens of jobs to its second campus, in Albany, N.Y., in the next year.

With the sale, which is expected to close by the end of the year, the Advanced Technology Development Facility will become part of SVTC Technologies. SVTC is the world's largest independent business to develop and commercialize technical breakthroughs for semiconductors and a new class of products based on nanotechnology, which involves using molecular-size particles to create materials and devices.

The Austin plant is the leading candidate to become the designated state laboratory in an effort, led by Gov. Rick Perry, to spur more nanotechnology research by scientists at the University of Texas and other state universities and research centers.

In March, the company paid $53 million for a similar facility in San Jose that is about half the size of the Austin fab.

No price was disclosed for the Austin purchase.

The pending acquisition of the Sematech fab will give the Silicon Valley company the research and engineering talent and advanced equipment it needs to attract a wide range of customers, from the world's biggest chip makers to nanotech startups.

The company is preparing to buy some very advanced processing equipment for the Austin fab that could be used by chip makers and nanotech startups. Some pieces of that equipment could cost several million dollars, an investment that would have been difficult for Sematech to accomplish.

Sematech, created in 1988, is a nonprofit consortium that does advanced research on chip making for member companies around the world.

In 2004, it spun off the advanced technology facility as a for-profit subsidiary so it could do contract work for outside companies and help defray the high costs of the fab's operations.

Last year, the facility had $50 million in revenue from work it did for Sematech, chip makers and other high-tech companies. After the sale, Sematech will remain its biggest customer.

The deal coincides with the shift of much of Sematech's research work to Albany, where the New York state government has offered $300 million in new incentives over the next five years.

Macquarie Electronics and Qimonda Complete US$289 Lease

Delray Beach, Florida, Macquarie Electronics announced the completion of a US$289 million operating lease transaction with Qimonda AG, headquartered in Munich, Germany.

The transaction involves a sale and leaseback agreement of 200 millimeter (mm) semiconductor manufacturing equipment located in Qimonda s Richmond facility in Sandston, Virginia.

Qimonda s Richmond facility manufactures dynamic random access memory (DRAM) products for a wide variety of applications included in the computing, infrastructure, graphics, mobile and consumer areas.

M+W Zander Awarded 300-mm Fab Construction Contract in Dalian, China

M+W Zander has said that it was selected by an undisclosed customer to be the general contractor for engineering, procurement and construction of the most advanced semiconductor fab in China, worth contractually $400 million to the firm. The fab was being built in Dalian, north-east China.

A ground-breaking ceremony was held on September 8, 2007 for the new facility, which will have a cleanroom of approximately 20,000 square meters in size. Construction is planned to be completed in the second quarter of 2009.

Interestingly, in March 2007, Intel Corporation announced that they were to start construction of Fab 68 in the coastal Northeast China city of Dalian in Liaoning Province at a cost of $2.5 billion. Intel said at the time that Fab 68 construction would begin later this year with production projected to begin in the first half of 2010.

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