The new president of Infineon Technologies' North American subsidiary said the company will place greater emphasis on design and consider increasing its reliance on foundry services when market demand for logic ICs resumes.
Robert LeFort, who replaces Jan DuPreez as head of Infineon Technologies North America Corp., said the parent company will maintain logic-IC production rates at fabs in Regensburg and Dresden, Germany, but is redirecting its investment strategy to avoid adding capacity in this area.
"It's a matter of resources. We want to invest more in logic IP and design and software than in manufacturing," LeFort said in his first interview with EBN since taking the helm of the San Jose chipmaker. LeFort added that Infineon already has invested heavily in the development of wireless chip-reference designs through its wholly owned subsidiary, Danish Wireless Design, and with the acquisition of Comneon, a Munich-based company that deve lops wireless applications software.
Like many chip manufacturers, Infineon has pared back its capital spending. The company cut its fiscal 2002 capital investment in half, to $800 million, according to Morgan Stanley, N.Y. In July, Infineon estimated that capital expenditures for the fiscal year beginning Oct. 1 would range between $1 billion and $1.5 billion, depending on market conditions.
Infineon already outsources a limited volume of its logic-IC production to foundries, including Hynix Semiconductor Inc., Taiwan Semiconductor Manufacturing Co. Ltd., and United Microelectronics Corp. "We've never been averse to using foundries, but on a selected basis," LeFort said.
LeFort also said that Infineon will focus most of its capex on the company's memory-chip operations. "To remain competitive in DRAMs, you have to invest heavily in manufacturing capabilities," he said.
On an annualized basis, the company claims to have doubled its bit-rate production in the fiscal year ended Sept. 30.
I nfineon is also increasing its use of third-party contractors to manufacture DRAM. Taiwan's Winbond Electronics Corp. is expected to begin supplying chips in the first quarter of next year using a process it licensed from the company, and Nanya Technology Corp., another Taiwanese DRAM vendor, has signed a memorandum of understanding with Infineon to build a jointly owned 300mm-wafer fab.
Such deals, however, carry risks, as Infineon discovered during its dealings with Mosel Vitelic Inc., Taiwan's other leading DRAM maker. Infineon earlier this month pulled out of a joint venture, ProMos Technologies Inc., charging Mosel Vitelic with breach of contract "for failing to meet certain requirements as to how the [ProMOS] ownership is managed."
LeFort declined to elaborate on the nature of his company's dispute with Mosel Vitelic. He said the two sides "are continuing to hold serious discussions" to resolve the situation, but that if no agreement is reached by Jan. 1, Infineon could terminate the contract.
Infineon already has refused the DRAM output allocated to it through ProMOS, but LeFort said that the lost production will have a negligible impact on the company.
In terms of 256Mbit equivalents, ProMOS supplied 10% of Infineon's total DRAM output of 50 million units per month, and LeFort said the volume could easily be met through the company's ties with Winbond and Nanya.
Infineon is not expected to outsource production of automotive ICs.
"The automotive market is very exacting," LeFort said. "Customers want the chip supplier to have very high control of the manufacturing process. To do this, we need to maintain our own manufacturing capability. This would be the last product to move to foundries."
LeFort should know. Before taking the reins of Infineon's North American operations, he was vice president of the company's automotive and industrial business, and prior to that was customer manager at auto electronics maker Delphi Automotive Systems