SEMICONDUCTOR UPDATE
October 2008
McIlvaine Company
TABLE OF CONTENTS
ASE, Spansion Ink Deal to Form Venture in China
University of Texas Gets Money for Semiconductor Research
Sitronics Hopes to Grow in Russia
AMD Moves Ahead in Shanghai Also
NEC to Expand in Roseville, CA
SemIndia Cancells Plans for FabCity Fab
Renesas Plans to Sell German Fab to Silicon Foundry
Mesa MicroFab Grows in Albuquerque, New Mexico
Confluence Solar, Inc. Raises $12.7 Million Series A Funding
New Bidder Surfaces for Mystery Packaging Center
Pac Tech Packaging Invests in Facility
Texas Instruments Plans Kilby Labs
NXP Semiconductors to Discontinue Facilities
Advanced Semiconductor Engineering Inc (ASE), the world’s biggest chip packager signed a memorandum of understanding with US chipmaker Spansion Inc. to form a chip testing and packaging venture in Suzhou, China.
The deal is ASE’s latest strategic alliance with chipmakers after forming a joint venture with NXP Semiconductor in Suzhou in a bid to boost growth by taking over factories owned by its partners, who hope to cut costs.
The joint venture with Spansion may represent a new growth driver for ASE, which makes a minimal portion of its revenues by providing testing and packaging services for flash memory chipmakers.
ASE may invest US$100 million in the joint venture, including buying a share of a Suzhou plant owned by Spansion.
The financial details are not finalized
ASE will obtain a contract from Spansion to provide chip testing and packaging services for the US company in the next few years at the Suzhou factory.
Spansion employs about 1,100 employees at its Suzhou factory, which is the flagship factory in the firm’s final manufacturing network. It opened in 1998.
The University of Texas at Dallas will get $16 million in public and private money for an ambitious new semiconductor research operation.
The Texas Analog Center of Excellence hopes to boost the regional economy by making breakthrough discoveries and training top-notch engineers for companies such as Texas Instruments Inc.
Dallas-based TI, in turn, will contribute $4.2 million to the center over three years. Other chip companies, acting through a coalition called the Semiconductor Research Corporation, will add $3.6 million.
UTD, the UT system and the state Emerging Technology Fund contributed the rest of money.
The new lab will start small next year, with just one full-time professor, but UTD thinks it can sign a star, who will make the project a world-class facility.
Eventually, the center could have a handful of full-time faculty along with dozens of graduate students – still small compared with many academic centers, but large in the world of analog research.
There are fewer than a dozen important analog labs in the country, so the UTD lab will become a world leader in a fast-growing industry the moment it opens its doors.
Russia's JSC Sitronics has some ambitious plans: It wants to leapfrog generations of semiconductor technology and spark activity that will launch Russia's modern chip industry.
Driving those plans is Mikron, a former Soviet-era fab now in Sitronics' microelectronics unit that recently upgraded to 0.18-micron manufacturing process technology with the help of Europe's leading IDM STMicroelectronics NV. Mikron began production at that node in 2007.
Sitronics recognizes that there is more catching up to be done and the latest effort is an ambitious plan to create a 65- going on 45-nm 300mm facility, independent of the Mikron fab, called Sitronics Nanotechnology. The Russian government has agreed to co-fund it through a 27 billion rouble (about $1 billion) contribution. The long-term commercial success of these two efforts will arguably shape the development of Russia's semiconductor industry.
The projects carry a hefty responsibility, and the man in charge of them is Gennady Krasnikov, the head of Sitronics' microelectronics division as well as Mikron's CEO.
So far, Sitronics is proving that chipmaking is a viable industry in Russia. Though overall the company is running at a second half $20 million net loss, that figure reflects a 75 percent debt reduction at the end of the second half. Thanks mainly go to Krasnikov's microelectronics unit, which saw year-on-year second half revenues soar 82 percent and profit nearly double, outperforming all the other divisions.
After a year in the works, Advanced Micro Devices Inc. (AMD) has obtained an investment of up to Rs.36,128.91 crore ($8.4 billion) from the Abu Dhabi government and separately plans to split the company into two parts.
As part of the long-awaited and expected plan, AMD will spin off its manufacturing operations into a new foundry company that could compete against TSMC, UMC, and possibly, one of its partners in Chartered. So, in effect, AMD will essentially become a fabless design house.
The Abu Dhabi government will pay Rs.9,032.23 crore ($2.1 billion) for a stake in the new foundry company. Abu Dhabi will contribute Rs.15,483.82 crore to Rs.25,806.37 crore ($3.6 billion to $6 billion) more over time to build new fabs.
The new foundry company, dubbed Foundry Co., will assume AMD's two fabs in Germany as well as a proposed plant in New York, according to the report. The foundry company will build chips for AMD and outside vendors.
Advanced Technology Investment Co., which is part of the Abu Dhabi government, will own about 56 per cent of the foundry company, and AMD will own the rest, according to reports.
About 3,000 of AMD's workers will move to the foundry unit. Doug Grose, who runs AMD's manufacturing operations, will run the new company. AMD Chairman and former CEO Hector Ruiz ''will step down as a director and head the board at the new company.”
All told, Abu Dhabi will invest Rs.36,128.91 crore ($8.4 billion) in AMD. 'The new company, which will assume Rs.5,161.27 crore ($1.2 billion) of AMD's debt, will receive as much as Rs.25,806.37 crore ($6 billion) from Abu Dhabi to expand the factories and get Rs.6,021.49 crore ($1.4 billion) in operating capital.
Last year, Abu Dhabi's Mubadala Development Co. acquired a 8.1 per cent stake in AMD. That group will now pay an additional Rs.1,350.53 crore ($314 million) to double its stake in AMD to 19 per cent.
The moves follow a rough period for AMD. The company has suffered due to product delays and losses. It is also unable to compete with Intel.
Local officials are expressing relief and excitement that Advanced Micro Devices Inc. confirmed plans to build a $4.5 billion computer chip factory in the Luther Forest Technology Campus in Malta and Stillwater. Construction is expected to begin next summer.
AMD spokesman Travis Bullard said the manufacturing operation will be a spinoff from the parent company and will be known as The Foundry Co.
He said the investment is now expected to be about $1 billion more than initially announced because the size of the facility has been increased by 30,000 square feet from the original drawings.
To date, AMD has not decided to build the fab. It has until next summer to make a decision and still receive Rs.5,161.27 crore ($1.2 billion) in incentives. A decision is due by year's end.
When they announced the project a couple of years ago, it was expected the plant would be 150,000 square feet. The new design calls for a larger clean room in the facility and will increase the project to 180,000 square feet.
Company officials said AMD is partnering with Advanced Technology Investment Company of Abu Dhabi to create the semiconductor manufacturing company.
The new global company, with operations in Dresden, Germany, Austin, Texas, and now in Malta, will combine advanced process technology, manufacturing facilities and “aggressive plans to expand its global capacity footprint,” officials said.
New York State will go ahead with its $1.2 billion subsidy for the project despite the state’s fiscal crisis.
The project, will employ nearly 1,500 people, and generate another 1,600 construction jobs.
Advanced Technology Investment Company, the Abu Dhabi company, will invest $2.1 billion to purchase its stake in The Foundry Co., of which it will invest $1.4 billion directly in the new entity and the remainder will be paid to AMD to purchase additional shares in The Foundry Co. The Foundry Co. will also assume approximately $1.2 billion of AMD’s existing debt.
“ATIC has committed additional equity funding to The Foundry Co. of a minimum of $3.6 billion and up to $6.0 billion over the next five years to fund the expansion of The Foundry Co.’s chip-making capacity beyond the manufacturing facilities initially contributed by AMD,” according to a company press release.
The funds will be used by The Foundry Co. to proceed with capacity expansion at its fabrication operations in Germany and to begin construction on a new state-of-the-art facility in Malta and Stillwater.
The computer chip factory is expected to create 1,465 high-paying jobs.
While the plant will mainly be in Malta, a portion of the facility will be in the town of Stillwater.
The plant will be built in stages with the first [fabrication section] completely in Malta. Part of the second fab and almost all of the third fab will be in Stillwater.
After announcing that it would spin off its fabs into a new joint venture, AMD plans to move ahead to deliver the first 45-nanometer processor, code-named Shanghai, in a few weeks to compete against Intel's six-core Xeon processors and the upcoming chips based on the new architecture code-named Nehalem. In addition to keeping 45-nm Shanghai processor production on schedule, AMD has big plans for the new manufacturing company, called The Foundry Company, including competing against TSMC for processor business.
While Advanced Micro Devices is busy spinning off its fabs into a new joint venture, the chip maker's executives said AMD still plans to deliver its 45-nanometer "Shanghai" processors by year's end.
In an interview, Nigel Dessau, executive vice president and AMD's chief marketing officer, said despite plans to spin off AMD's manufacturing facilities in Dresden, Germany, into a new joint venture company, the chip maker still plans to bring its 45-nm Opteron processor, code-named Shanghai, to the market by the end of 2008.
While the fab spinoff should help AMD correct its financial situation, which includes seven straight quarterly losses, Shanghai is seen as the company's answer to Intel's recently released six-core Xeon processors for high-end systems and its upcoming lineup of chips based on the new "Nehalem" microarchitecture.
During previous disclosures, AMD officials have said Shanghai will contain four processing cores and offer 6MB of Level 3 cache compared with the 2MB of L3 cache in the 65-nm version of the quad-core Opteron processors.
When Shanghai goes into full production in a few weeks, it will be manufactured at AMD's Fab 36 facility in Germany. That facility, along with Fab 38, will form the base for The Foundry Company, the new joint venture between AMD and ATIC (Advanced Technology Investment Company), which is backed by the government of Abu Dhabi.
In the interview, Dessau said the company plans to fully ramp its production to 45-nm as planned and the Dresden facility will deliver products to AMD's partners and customers on time.
While AMD will serve as The Foundry Company's first and primary customer for x86 processors, the new company has ambitions beyond serving a single customer.
By spinning off its manufacturing facilities, AMD can now concentrate on processor design and marketing, while The Foundry Company can compete for new business on its own.
Before any deal goes through, however, AMD and its Abu Dhabi partners are expected to face some scrutiny from CFIUS (Committee on Foreign Investment in the United States), a government interagency committee chaired by the Secretary of the Treasury. AMD's processors are used in many computers and servers used by the U.S. government, including the giant Roadrunner supercomputer that IBM built for the Los Alamos National Laboratory in New Mexico.
AMD and its Abu Dhabi partners are already preparing the paperwork for the CFIUS committee, although he expects the government will approve the joint venture partnership without problems. In addition, AMD is preparing paperwork on the deal for the European Commission, the regulatory arm of the European Union.
NEC Electronics America, Inc. announced that it will expand production using a 0.15-micron process on its new eight-inch wafer line in Roseville, California. The eight-inch line, now in mass production, was established in 2007 to meet increased demand from worldwide customers in the automotive, consumer electronics and computer industries. Installation of additional equipment for the 0.15-micron process will approximately double capacity of the eight-inch line, which is expected to reach full production in March 2009.
In addition to strengthening NEC Electronics America's global manufacturing support, the expansion also makes the fab one of several that can be leveraged through NEC Electronics Corporation's Multifab(TM) manufacturing program, which enables customers to qualify multiple manufacturing and assembly/test facilities for a single design platform.
The expanded 0.15-micron process on an eight-inch line will complement NEC Electronics America's existing six-inch lines that use 0.35- and 0.25-micron processes. Fabrication on those lines will continue based on customer needs.
To underscore its commitment to protecting the environment, NEC Electronics America maintains ISO 14001:2004-conformant environmental management systems at its company headquarters in Santa Clara (California), manufacturing plant in Roseville (California) and marketing, sales and design office in Irving (Texas). In addition the plant in Roseville has been the recipient of numerous WasteWise awards from the U.S. Environmental Protection Agency (EPA); as well as WRAP Awards from the State of California in recognition of the environmental programs in place and the results achieved.
The company's dedication to providing the highest-quality products is furthermore evidenced by its ISO/TS 16949:2002-conformant automotive quality system and ISO 9000:2000- and QS 9000-conformant quality management systems.
SemIndia has announced that it will not pursue plans for a Rs.12,903.18 crore ($3 billion) semiconductor chip fabrication unit that was to come up at the much hyped FabCity.
According to reports, the company struggled to achieve financial closure for the fab even as its three-year technology agreement with the world's second largest chip-maker AMD expired some time back. Subsequently it was reportedly in talks with other technology companies such as Tower Semiconductor of Israel to take AMD's place.
Renesas Technology Corp., one of the world's leading semiconductor solution providers, is planning a sale of its production facility in Germany — Renesas Semiconductor Europe (Landshut) GmbH (RSEL) — to Silicon Foundry Holding (SFH), a newly established Germany-based company specializing in semiconductor foundry services. The final agreement is expected to be concluded by the end of 2008.
RSEL has been present in Landshut for 28 years and has evolved to produce the highest possible quality of secure microcontroller wafers for smart card applications with 0.35um and 0.18 um processes.
SFH is a new company established by two RSEL managers, specializing in semiconductor foundry services especially for the European market. The company has made a business proposal which provides a positive future to RSEL with a new strategy.
The detailed agreement is still in negotiation and it is expected to be concluded by the end of 2008
The Mesa MicroFab project in Albuquerque, New Mexico, used Lafarge's Agilia in its construction. The project is made up of several parts, including a 89,100 square foot semiconductor fabrication facility, a central utility building and technician offices. The Fab includes a three-level cleanroom with a fan deck, sub-fab, and fabrication levels.
Founded by silicon industry veterans, Confluence Solar, Inc., a manufacturer of high quality single crystal silicon for the solar photovoltaic industry, announced that the company has raised $12.7 million in capital. Confluence Solar, Inc. is opening a new facility in Hazelwood, Missouri to develop its HiCz(TM) single crystal silicon product.
There is yet another entity making a strong bid for the mystery IC-packaging center in New York.
The Mohawk Valley Economic Development Growth Enterprises Corp. (EDGE) — which is in the center of New York State--is at least the third or fourth entity making a bid for the R&D chip-packaging center in the state. Mohawk Valley EDGE is the site developer and marketing organization for Marcy NanoCenter, a fledging fab and R&D site in central New York State.
As reported, in June, New York State said it would invest $50 million toward the establishment of a new, 120,000-square-foot semiconductor packaging R&D center at a to-be-determined location in upstate New York. This center will be established, managed and owned by the College of Nanoscale Science and Engineering (CNSE), with IBM conducting operations at that site.
Rensselaer Polytechnic Institute (RPI) will also be a research partner in the new packaging facility. It is expected this public-private partnership will ultimately create over 675 jobs.
No decision has been made on the location of the R&D IC-packaging center. It's up for grabs in the state and several regions want it for good reason: They need the jobs amid an economic downturn.
In New York, Albany wants it. Hudson Valley wants it. Saratoga County wants it.
Sources said that Marcy NanoCenter wants the project as well. Marcy NanoCenter has a 300-acre greenfield site for fabs and other potential projects.
In June, Mohawk Valley EDGE quietly issued a release on its Web site, saying that the area would benefit from the 120,000-square-foot semiconductor packaging facility. If the Mohawk Valley were to land the plant, the area could attract some 200 scientists and researchers.
Even if it does not win the plant, opportunities would exist for as many as 475 small businesses, contractors and manufacturers to supply and produce high-tech items needed to run and support such a facility, according to the group.
Oneida County Executive Anthony Picente wrote New York Governor David Paterson in June, saying he wants the facility in Marcy because the region needs such high-paying jobs.
Pac Tech Packaging Technologies, the world’s leading supplier of electroless wafer-bumping technology, is investing up to RM75 million over the next three years at its new Asian facility, Pac Tech Asia Sdn Bhd, located at the Bayan Lepas Industrial Zone in Penang.
Pac Tech Group president and CEO Elke Zakel said the initial start-up capital for the plant, which was RM25 million with 5,000 sq ft cleanroom capabilities, would be increased by another RM50 million with an additional 10,000 sq ft of cleanroom being added on.
“Out of the RM50 milllion, we will allocate RM12.5 million for our research and development which will be established as part of our second phase,” she said.
The new facility would provide state-of-the-art wafer bumping and back-end processing for semiconductor companies within the Pacific Rim.
This facility is designed and laid out to accommodate mass production and is capable of handling up to 600,000 wafers per year. The facility will ramp up production next month.
Pac Tech Asia will also provide a variety of special applications designed to enhance and support the Asian semiconductor manufacturing community.
Texas Instruments has announced plans to establish a new research facility called Kilby Labs. The facility was announced on the 50th anniversary of the integrated circuit and named in honor of IC inventor Jack Kilby.
The center, which will be located on TI's Dallas North Campus, is expected to have 100 researchers, 70 from TI's global staff of 30,000 with the rest from academic institutions.
TI named Ajith Amerasekera as the director of the facility. He previously served as chief technology officer for TI's application-specific integrated circuit division.
Gregg Lowe, senior vice president and the project's executive sponsor at TI, said: "Our vision for Kilby Labs is that it will combine TI's experience in developing new chip technologies and our understanding of customer needs with the dreams of a new generation of innovators."
NXP Semiconductors BV said it will close or sell four plants, including one in New York State, and cut 4,500 jobs, or 14.5 percent of its global work force.
NXP, the former chipmaking arm of Royal Philips Electronics NV, said it is responding to "a challenging economic environment, a weak U.S. dollar" and its own decision to sell most of its wireless chip manufacturing operations to STMicroelectronics NV in April.
It said it would spend $800 million to cut the jobs, which will then save the company $550 million per year. The company employs about 31,000 workers worldwide.
NXP said it would close or sell factories in Fishkill, N.Y.; Nijmegen, Netherlands; Hamburg, Germany and Caen, France.
The company reported a net loss of €312 million ($440 million) in the second quarter, down from a €348 million net loss in the same period a year earlier.
NXP said it will now focus on making chips for cars and ID cards, among others.
The company suffered a round of bad publicity earlier this year when a Dutch university showed that one of its best-selling chips -- used in 'swipe' cards that grant access to railways and government and corporation buildings -- is vulnerable to hacking.
Philips sold an 80.1 percent stake in NXP to a consortium led by Kohlberg Kravis Roberts & Co. for €4.3 billion ($6.3 billion) in August 2006.
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