Have EC And ST Changed Tack On European Fab?

This was the message of Jean Therme, director of CEA-Grenoble and chairman of the European Key Enabling Technologies high level group, speaking to the ISS-SEMI conference in Grenoble last week.

“The commission wants to make possible the siting of fabs in Europe,” Therme told the conference.

Europe’s share of the world’s fabs has been declining, said Therme, with only three 300mm fabs – Intel’s in Ireland, ST’s at Crolles and Globalfoundries’ in Dresden.

Collectively Europe has the capacity to fab 1,453,679 eight inch equivalent wafers per month, said Therme, which is about the same as TSMC’s capacity.

STMicroelectronics is to spend more of its manufacturing capex in Europe, Alain Astier, vice president for front end technology and manufacturing group at ST, told the conference.

“Manufacturing is weak in Europe, but in the last two years it has been recovering,” said Astier, “Europe is investing in manufacturing: Intel is investing in Ireland, Globalfoundries is investing in Dresden, ST is investing $500 million a year in Europe.”

Asked if ST CFO Carlo Ferro’s long-term strategy of gradually reducing capex as a proportion of sales had changed, Astier replied: “The strategy has not changed. We have shown we can be cost-competitive in Europe and there has been a decision to invest much more in Europe.”

Asked if Europe benefited from having manufacturing, Astier pointed to the ‘strong correlation’ of R&D to manufacturing, arguing that R&D follows manufacturing, and to have a strong microelectronics sector required the full ecosystem from R&D to design to manufacturing.

ST’s CEO, Carlo Bozotti, demonstrated a qualified change of heart from ST’s previous practice of shifting production from the US and Europe to Singapore and increasing the amount of manufacturing outsourced to foundries.

He told the conference that “customer impatience” is one of the key reasons for maintaining an in-house semiconductor manufacturing capability.

“Customers want to get to market quickly,” said Bozotti, adding that having fab allows ST to develop world-leading derivative CMOS technologies at Crolles which deliver higher margins for ST’s silicon.

Bozotti also instanced MEMS as another example of where manufacturing expertise is fundamental to success.

Bozotti emphasised the link between R&D and manufacturing. “For every $ we spend on R&D we spend four times as much on commercialising products and platforms,” he said.

He praised the previous speaker, Jean Therme, for producing the Key Enabling Technologies committee’s report.

“The report emphasises that manufacturing in Europe is central,” said Bozotti, “I’m convinced it is possible to have a successful manufacturing industry in Europe.”