SEMICONDUCTOR UPDATE
August 2009
McIlvaine Company
TABLE OF CONTENTS
Texas Instruments to Bid on Qimonda Factory
Samsung Investing $500 Million to Retool Plant in Austin Texas
Malaysia Deepens its Electrical & Electronics Sector
IDT to Leave Hillsboro in Two Years
Spansion Has New Plans for AMD’s Old Fab 25
Freescale Semiconductor Brings MEMS to Texas
Two-year Grant Helps UCSD Scientists “Light” Up Semiconductor Production
Award Given for Intel’s Fab 28 Construction
AMD Spinoff GlobalFoundries Inks STMicroelectronics
Air Products Signs Contract with Taiwan's CMO to Supply Flat Panel Market
DB Schenker Develops Semiconductor Distribution Centre in Korea
Ceitec Builds Brazil's First Chip Design Center
Texas Instruments Inc. has agreed to bid $172.5 million for a mothballed chip factory in Sandston, Va., belonging to Qimonda AG of Germany, which is under bankruptcy protection.
TI's offer will set a floor price in an auction for the factory, if approved by the Delaware court administering the bankruptcy process of Qimonda's U.S. subsidiary. Qimonda's lawyers filed the agreement with the court.
Qimonda closed the factory earlier this year, laying off 1,500 workers.
The factory made memory chips, but Dallas-based TI said it would retool it to make analog chips, a TI specialty used in a wide variety of gadgets, including cell phones. It said the factory would likely be the first to use large 300 millimeter silicon wafers as the raw material for analog chips. Large wafers generally make for more efficient production at lower cost.
If another bidder ends up as the buyer after the auction, Qimonda will pay TI a breakup fee of $4.3 million, plus up to $750,000 in expense reimbursements.
Shares of Texas Instruments added 30 cents to $24.41 in afternoon trading Friday
Samsung Austin Semiconductor said it will upgrade its aging, eight-inch semiconductor plant and begin making 12-inch chips there by 2010.
South Korea-based Samsung's move will mean an investment of roughly $500 million. Work at the plant will stop in October with the remodel slated for completion sometime next year. Samsung operates two plants in the local area, including the state-of-the-art facility it opened in Northeast Austin in 2007.
Roughly 500 employees at the plant will be laid off by October, Samsung said. The retooled facility will add as many as 200 jobs when it opens next year, officials said.
"In order to upgrade and convert the older facility, we must take the manufacturing area back to the bare walls," said Y.B. Koh, president of Samsung Austin. "The new facility will add a great deal of flexibility to our existing 12-inch plant."
According to the Greater Austin Chamber of Commerce Samsung's investment will have a $1.3 billion effect on local business, creating roughly 5,500 jobs indirectly.
Malaysia has developed itself into an epicenter for semiconductor manufacturing for the last 30 years. In fast tracking up the value chain of Electrical and Electronics (E&E) industry, Malaysia has been involving in research, design and development. The next focus areas are advanced analog, radio frequency, mixed signal and power management, integrated circuit design manufacturing and fabrication.
The Minister of Science, Technology and Innovation (MOSTI) for Malaysia, Datuk Dr. Maximus Johnity Ongkili in his statement, has emphasized on the importance of human capital development in supporting the growth of E&E industry in Malaysia. Currently, the sector employs some 462,000 people or 43% of total employment in the overall manufacturing sector. In ensuring that Malaysia continues to be competitive, MOSTI collaborates with a network of global technology leaders to induce technology transfer and capacity building program.
MOSTI will also continue to provide tangible incentives on commercialization and innovation efforts, in supporting the designed and development of electronic products in Malaysia.
Through its key agencies including the Malaysian Industry-Government Group for High Technology (MIGHT), MIMOS, SIRIM and Technology Park Malaysia, MOSTI promotes international R&D alliances between Malaysian companies and leading-edge global organizations. This is to ensure the progression into the next-generation of semiconductors involving green initiatives, bio-electronics, nanotechnology, as well as migration towards integrated system solutions.
In effort to grow the E&E industry in Malaysia through innovative design and development, MIGHT, Malaysian Institute of Microsystems (MIMs) and International Society for Quality Electronic Design (ISQED) have taken a joint initiative to gather representatives from global E&E industrial entities and leading universities at the 1st Asia Symposium on Quality Electronic Design (ASQED '09) on 15-16 July 2009 in Kuala Lumpur. This initiative is supported by MOSTI and Malaysian Industrial Development Authority (MIDA).
ASQED '09 was intended to gather and share the electronic design knowledge in bridging the gap between electronic design tools and processes, to achieve optimum design quality. It is the first ever ISQED event held outside the United States, after being a successful and sustainable annual event in the in the United States for the past 10 years.
The symposium also involves the exchange of documents between ISQED and MIMs to mark the rights extended to the latter, to annually organize the ASQED event in Malaysia for the next four years.
The finale of ASQED 2009 was the Partnership Exchange session involving the Deputy Minister of MOSTI representing the Minister, ASQED Committee Members and notable industry figures on electronic design both locally and overseas. The session involved exchanges on impactful suggestions from the industry, as well as insights on MOSTI's direction in further deepening and strengthening the E&E industry in Malaysia.
In moving forward, the 2nd ASQED will be held in Penang, the 'Silicon Island' of Malaysia in July 2010.
Integrated Device Technology, a longtime player in Oregon's Silicon Forest, will leave its aging Hillsboro fabrication plant in two years and contract its manufacturing to a company in Taiwan.
The San Jose, Calif.-based company said the Hillsboro facility, which at its peak employed 380 people, can no longer produce leading-edge technology. Upgrading the facility would cost billions, an investment the company says it can't afford.
"You have to have equipment that can make chips that much smaller," said Chad Taggard, IDT's vice president of corporate marketing and strategic planning. "It costs $4 billion to build a new fab, and we can't afford to do that. We want to focus more on the design of the products."
Exacerbated by the recession's impact on the boom-and-bust chip industry, IDT's decision to move manufacturing overseas is part of the decade-long decline of Oregon's chip industry and the movement of cutting-edge manufacturing to Asia.
IDT, which makes a wide range of semiconductors for computers, communications equipment and consumer electronics, has been shifting manufacturing to Asia for the past decade.
Built in 1996, the Oregon fab is IDT's last. The company is now focused on designing products, leaving manufacturing to foundries -- overseas contractors that specialize in making chips and semiconductors for hundreds of different companies.
But the trend has taken its toll on Oregon jobs and on the supply chain that includes equipment and chemical vendors and local machine shops.
"This could be one more shuttered fab in the area," said Greg Cole, who heads the Northwest chapter of the industry trade group SEMI. "There's an awful lot of facilities and equipment available right now."
Manufacturing ebbs
IDT was part of the wave of semiconductor manufacturers and suppliers that washed over Oregon 15 years ago, attracted by cheap land, water and electricity, proximity to California and generous tax breaks.
Apart from Intel, the promise of well-paying manufacturing jobs and ongoing investments in plants has faded, with Oregon's aging chip factories unable to compete.
IDT's stock is down about 40 percent compared with the same time last year.
IDT's transfer to Taiwan will take roughly two years, with the Hillsboro plant running until then. The company has not decided whether it will keep an office in Oregon, said company spokeswoman Carolyn Robinson.
The company hopes to sell its 25-acre site, near Intel and SolarWorld, as a fully operational fab. With a 250,000-square-foot building, the company has hired ATREG, the semiconductor sales division of real estate broker Colliers International, which focuses on selling operational fab infrastructure.
IDT, with an Oregon work force estimated at several hundred and a worldwide work force of 2,400, has yet to identify how many Oregon employees will remain with the company at its California headquarters.
"We're not shutting down the fab," Taggard said, adding that he hopes a new owner would keep the workers employed. "We're going to work over the next two years to sell this fab."
But the recession poses a challenge, as tech manufacturing plants are not in high demand.
IDT's decision comes two weeks after Radisys, another Hillsboro company that makes components for electronic products, said it will transfer its remaining manufacturing to Asia and lay off 80 by mid-2010.
John Southgate, Hillsboro economic development manager, said the site could be attractive to a solar manufacturer, a growing industry in Oregon.
"We have an asset that we can peddle," Southgate said. "Some of the solar companies are more interested in buying an existing building because it's cheaper to retrofit than building from scratch."
With such early notice, the economy is bound to improve, Southgate said, and workers will be able to make plans well in advance if the site isn't sold. "The silver lining," Southgate said, "is that there's a lot of lead time to plan for the workers and the building."
Spansion Inc. announced that its venerable Fab 25 in Southeast Austin will play a vital role in its manufacturing operations as it moves to exit bankruptcy by the end of this year.
The fabrication plant, executives said, is well-suited for the new market that Spansion is going after, which is memory chips for virtually all products except cell phones. Fab 25 started out as a processor factory in 1995 for Advanced Micro Devices Inc., but it shifted to flash memory production in 2002.
Freescale Semiconductor Inc.'s Oak Hill fab is gearing up to become a more formidable player in making MEMS (micro-electrical-mechanical system) devices as the Austin chipmaker pushes to become a bigger player in that market.
Oak Hill is in a two-year process of taking over MEMS production from Freescale's factory in Sendai, Japan , which is expected to close in 2011.
MEMS devices — which sense motion, pressure and other real-world forces — are being used in a wide variety of consumer products as well as in automobiles . They are made by joining two silicon wafers together to create a tiny chamber containing a mechanical element that works with analog electrical circuitry on the surrounding chip.
Nintendo 's Wii video game console uses a motion-sensing game controller equipped with a MEMS device. So does Apple's iPhone, which rotates its screen image depending on which side of the device is pointing up. One of the classic jobs of MEMS devices is to sense a crash impact in cars so airbags can deploy.
Global sales of MEMS were growing rapidly until the recession hit. Market research firm IC Insights expects MEMS sales to decline by 26 percent to $4.1 billion this year before rebounding in 2010.
Analyst Rob Lineback with IC Insights said Freescale has been a longtime player in making MEMS sensors used in cars and is working hard to branch out into consumer electronics.
The Oak Hill fab started making MEMS devices last year and is expanding its space for MEMS fabrication. The expansion, scheduled to be finished Oct. 1, will give the fab the capacity to triple its MEMS output to about 120 million a year.
For fab operations director Chris Magnella , MEMS technology is just one more way that the 18-year-old chip factory can stay relevant and important to Freescale.
The Oak Hill fab is five process generations behind the cutting edge of chip manufacturing, Magnella said, but there are still plenty of products that it is well-suited to make.
As Magnella sees it, the fab has three big advantages: a veteran work force; a new, more efficient operational culture; and no debt (the facility was paid for a long time ago).
That means the plant can make money for the company if it can attract enough products to be made with its various manufacturing technologies. "We can run this factory for another 10-plus years," Magnella said. "I like our plan. But it is still a battle every day."
Part of that efficiency move means the factory can make chips with a much smaller work force than it used to have. The Oak Hill fab employs just fewer than 500 workers, which is slightly less than the factory started with in the early 1990s.
The company installed a wireless tracking system that locates all the silicon wafers being processed in the factory. That enables workers to quickly find wafer containers and run lots of different kinds of products in the factory at any time — part of the key to its business success.
Oak Hill is not close to the industry's leading edge of chipmaking, but it doesn't have to be. Thousands of different semiconductor products are made in factories that are well behind the leading edge.
"The leading edge is so expensive," Magnella said. "If you don't have the manufacturing volume to fill the factory, you are going to bleed to death."
A big part of the factory's recent success, Magnella said, has been its adoption of "kaizen," a Japanese-created culture of continuous improvement.
The system involves days-long classes that bring workers from different levels of the factory together to brainstorm solutions for operational improvements and efficiency moves.
The process teaches workers at every level of the factory to take more responsibility for its efficient operation.
"Kaizen is a revolution for us," Magnella said. "It is a huge employee ownership thing. You have to empower people to the point where decision-making gets driven down to more workers. People are empowered to make more decisions, and they love it."
Scientists from the University of California, San Diego (UCSD) have received a two-year UC Discovery Grant from semiconductor manufacturer, KLA-Tencor. The grant allows them to conduct research that will hopefully help metrology tools catch up to new optical lithography developments.
The UCSD scientists are using laser plasma-produced light sources to hopefully create improvements of critical inspection tools for the semiconductor industry. Researchers are hoping to develop new extreme light sources that operate at EUV (Extreme Ultraviolet) and actinic wafer exposure wavelengths. Currently, the smallest features on a microchip are created using a light source that is 45 nanometers, but the UCSD researchers hope that they can create EUV light sources that produce a wavelength of only 13.5 nanometers.
The researchers stated that they believed this research would help the American semiconductor industry remain competitive in the world market.
The award was given for high quality logistic services rendered during the construction of Intel's Fab28 project which lasted two years.
Maxine Fassberg, Intel's Vice President and Intel Israel General Manager, awarded Maman Group with a special outstanding logistics award for high quality logistic services rendered during the construction of Intel's Fab28 project.
Intel's wafer Fab28 covers an area of 130,000m² (1,398,800 sq. ft.) in four buildings, with 20,000 square meters (215,200 sq. ft.) of Class 10 (ISO Class 4) cleanroom space.
The completed Fab 28 structure measures 283 dunam. 770,000 meters of cables were put during the construction which is 1.7 times the length of the State of Israel.
350 tons of cables and other accessories were installed in the factory (equivalent of 2 Jumbo, 747 airplanes) as well as 45,000 lighting fixtures which produce 1.8 million watt, the equivalent of the lighting of 5 football stadiums.
The wafer Fab28 received an investment of around US$1 billion from Intel, with additional support worth about US$525 million coming from the government of Israel.
Fab 28 is set to manufacture at the 45-nanometer manufacturing node on 300-mm diameter wafers. The Fab28 is expected to generate exports worth US$3 billion annually.
A week after breaking ground on a new $4.2 billion manufacturing plant in upstate New York, GlobalFoundries signs a deal to manufacture products for STMicroelectronics. GlobalFoundries, which AMD spun off in March, will manufacture products that will go into wireless and handheld devices as well as consumer electronics.
GlobalFoundries, the spinoff company from Advanced Micro Devices, will manufacture processors for wireless and computer devices for STMicroelectronics.
GlobalFoundries announced the deal with STMicroelectronics July 29, marking the first non-AMD customer for the young manufacturing company.
The announcement came less than a week after GlobalFoundries and AMD—along with federal, state and local officials—broke ground July 24 for a semiconductor manufacturing plant at the Luther Forest Technology Campus in Malta, N.Y. Company officials say the $4.2 billion plant, which is expected to start manufacturing chips in 2012, will be the most advanced facility in the world.
AMD spun off GlobalFoundries in March as part of its “fabless” strategy. A manufacturing plant in Dresden, Germany, that was once owned by AMD is now owned by GlobalFoundries. The company’s production is centered at a 300-millimeter facility in Dresden called Fab 1.
The plant in New York will be Fab 2.
Those manufacturing facilities currently make AMD chips, and starting in 2010 they also will produce STMicroelectronics processors for wireless and handheld devices, as well as computers.
“When we launched GlobalFoundries, our long-term vision was to bring a new business model to the foundry market and to become the partner of choice for the largest and most innovative semiconductor design and manufacturing companies,” GlobalFoundries CEO Doug Gross said in a statement. “With the addition of an industry leader in low-power technology like STMicroelectronics, we now begin to deliver on this promise.”
GlobalFoundries will manufacture STMicroelectronics products based on 40-nanometer low-power bulk silicon technology, which company officials said results in good performance and longer battery life, all of which is in demand from wireless applications, handheld devices and consumer electronics.
AMD has a 34 percent ownership of GlobalFoundries, with an investment fund, Advanced Technology Investment, owning the other 66 percent.
Air Products announced that its subsidiary in Taiwan, Air Products San Fu Co. Ltd., has signed a long-term contract with Chi Mei Optoelectronics (CMO), the world's fourth largest TFT-LCD supplier, to provide nitrogen and bulk gases to their Fab 6 located in Tree Valley Science and Industry Park (TVSIP), Tainan, Taiwan.
Air Products San Fu has installed an air separation unit next to CMO Fab 6 to provide on-site nitrogen. Air Products also will supply bulk gases including oxygen, argon, helium, hydrogen and carbon dioxide to CMO and other customers in the TVSIP.
TVSIP is located adjacent to Tainan Science Industry Park (TSIP), one of the largest technology parks in the world. Administered by the Tainan County Government, TVSIP is a TFT-LCD industrial park with a cluster of related producers including glass, backlight module, and television assembly manufacturers.
"CMO has been a long-standing customer for Air Products, and we are honored to be selected to support the needs of this leading TFT-LCD supplier," said Corning Painter, vice president and general manager of Global Electronics, Air Products. "Our facilities in TVSIP and TSIP will further enhance our capabilities to provide reliable, flexible and cost-competitive solutions to meet the requirements of our customers in the two parks."
Air Products San Fu has established a leading supply position in TSIP, and its customers in the park include CMO's Fab 3, Fab 4, Fab 5 and Fab 7; TSMC's Fab 6 and Fab 14 Phase One and Phase Two; and United Microelectronics Corporation's (UMC) Fab 12A. Air Products San Fu serves its customers through large ultra-high purity (UHP) bulk gas facilities and a pipeline that is fed by the world's largest UHP nitrogen facility. This plant also produces UHP liquid nitrogen and UHP liquid oxygen for other semiconductor customers.
Air Products San Fu is a leading producer of industrial gases in Taiwan, supplying atmospheric gases, electronics specialty gases, chemicals and related equipment for many industries. Air Products San Fu is one of "The Top 200 Companies" in Taiwan and is the first gas company in Taiwan awarded ISO9002 and ISO14000 certifications.
Air Products (NYSE: APD) serves customers in industrial, energy, technology and healthcare markets worldwide with a unique portfolio of atmospheric gases, process and specialty gases, performance materials, and equipment and services. Founded in 1940, Air Products has built leading positions in key growth markets such as semiconductor materials, refinery hydrogen, home healthcare services, natural gas liquefaction, and advanced coatings and adhesives. The company is recognized for its innovative culture, operational excellence and commitment to safety and the environment. Air Products had fiscal 2008 revenues of $10.4 billion, operations in over 40 countries, and 21,000 employees around the globe. For more information, visit www.airproducts.com.
Schenker Korea Ltd has announced that it has started operations of a global distribution centre for the Dutch company ASML in its Korea Logistics Center in the Free Trade Zone at Incheon Airport near Seoul. ASML is the world's leading provider of lithography systems for the semiconductor industry, manufacturing complex machines that are critical to the production of integrated circuits or chips. The new distribution centre is the first of its kind in Korea.
The 2,000sq.m. (21,520 sq. ft.) temperature and humidity controlled, high bay ASML storage and handling area comprises an 80sq.m. (8,608 sq. ft.) cleanroom. The cleanroom underwent stringent testing together with the cleanroom construction supplier and an ASML cleanroom expert from Taiwan.
Mr. Martin Bongard, Managing Director Schenker Korea Ltd, commented, "With the setup of the cleanroom DB Schenker has set a benchmark for logistics in Korea. With ASML as our partner we were able to further develop and customize our logistics solutions for the global semiconductor industry."
DB Schenker commenced operations of its 10,000sq.m. (107,600 sq. ft.) facility at Incheon Airport in 2006. The Korean government has been supportive of DB Schenker's activities since one of its major targets is to transform Korea into a logistics hub for Northeast Asia. Facilitation of customs procedures is one area of cooperation between DB Schenker and the Korean authorities.
Brazil ASIC developer Ceitec S.A. has recently opened Latin America's first IC design center in the state of Rio Grande do Sul. The company plans to add 60 engineers to its ranks who will design RFID, digital media and wireless communication chips.
Significantly, the new IC design center would make RFID, digital media and wireless communication chips for its delayed fab at Porto Alegre.
The 6-inch Porto Alegre facility, which was expected to start operations last year, had hit the speed breaker with snags in equipping the facility taking centre stage. The facility might now go on stream during the first half of the next fiscal, it is expected.
The new Ceitec IC center is being seen by the Latin American semiconductor industry as a right move by the Brazilian government which has already unveiled a slew of initiatives to establish IC design centers, fabs and assembly plants in the country.
Ceitec had earlier been in the news back in 2007 when it had licensed a 0.6-micron manufacturing technology from Germany-based X-Fab Semiconductor Foundries.
With the facility on stream, the company has recruited former Virage Logic and Soitec executive Eduard Weichselbaumer to serve as president. According to Weichselbaumer, Over the years, many world-class semiconductor professionals have been trained by Brazil's Ministry of Science and Technology and it provides Ceitec with a highly-qualified workforce”.
The Brazil government invested around $ 210 million in the center, which offers advanced environment to enable Ceitec engineers to develop chips in a new facility.
"When a new facility is opened here, it is often a technology transfer but Ceitec S.A. is quite different," said Dilma Rousseff, chief minister of Brazil's Casa Civil. "The company is creating a center of excellence that is capable of generating its own technology. These are the first steps to see a new matrix of production in Rio Grande do Sul."
Newly appointed Ceitec president Eduard Weichselbaumer will lead the company's efforts developing market's for the company's chips in RFID, wireless communication and digital media markets.
"Over the years, many world-class semiconductor professionals have been trained by Brazil's Ministry of Science and Technology and it provides Ceitec with a highly-qualified workforce," Weichselbaumer said. "We hope to repatriate experienced Brazilian engineers to help us develop chips for CEITEC and attract the best talent from around the world to make our company an industry leader in microelectronics design and production."
Brazil minister of Science and Technology, Sergio Rezende, said the Ceitec design center is strategic for the development of the Brazilian economy. "The opening of this facility represents another step in Brazil's return to the microelectronics industry," Rezende said. "The company is now in the process of installing equipment at its fabrication plant in Porto Alegre and the goal is to begin chip production by the end of the year.
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