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Infineon is looking at expanding its 300mm in-house fab capacity stating: ‘Infineon will decide about the start and the location of a 300mm volume production during the current fiscal year,’ says the company.
Why is that surprising? Well, egged on by the financial community, semi CEOs across the world have been badgered into accepting the ‘fab-lite’ model.
Now, with tight capacity, with OEM customers complaining about shortages, with some IC companies’ growth constrained because they cut back too much on in-house fab, the ‘fab-lite’ strategy is becoming discreditied.
“A fab-lite strategy is a no-cash strategy,” is the disdainful comment of the President of TI Europe – a company which has invested prodigiously in in-house fab recently.
The game may be changing. CEOs have realised that if you can’t get your hands on wafers you’ve got no product to sell and no money coming in. They are beginning to see the need to control their manufacturing destiny.
If this is how things are going to be, then it’s a good thing for the industry because it can now differentiate its products through process and not sink into the trap of using common processes producing similar products which rapidly commoditise.
The basics of the Infineon expansion are that they have bought land and 300mm manufacturing equipment and facilities in Dresden which belonged to its former subsidiary Qimonda which went bankrupt.
The purchase includes the cleanroom, manufacturing facilities and 300mm manufacturing equipment of the former Qimonda Dresden site. The move forms part of the company’s strategic capacity expansion.
Infineon is buying the assets from Qimonda’s insolvency administrator for €100.6m.The insolvency administrator had kept the cleanroom facilities operational after the insolvency proceedings were opened. Infineon now takes over the full remaining items of property and manufacturing facilities.
The move follows a healthy surge in orders over the last twelve months. ‘Based on this transaction and the further expansion of capacity due to continued strong order intake and a healthy level of orders on hand, Infineon is increasing the capital expenditure budget for the 2011 fiscal year from approximately $700m to €850m,’ states the company.
With this purchase Infineon secures 300mm manufacturing equipment that forms an important basis for potential volume production of 300mm power semiconductors.
Infineon is currently working on a development project to assess the use of 300mm wafers for manufacturing power semiconductors on thin wafer technology.
For this purpose a pilot line is set-up at the company’s site in Villach, Austria. Some of the machinery now acquired will be used for completion of the pilot line in Villach.
Infineon’s move will raise the question once again: Is fab-lite too dangerous a strategy?
After all, for the first time in history, the fabless sector grew slower than the IDM sector last year.
After last year’s the shortages fiasco which saw car factories closed for lack of ICs, telecoms network equipment manufacturers losing sales for lack of semiconductors, and consumer OEMS hamstrung by dwindling chip deliveries, semi sales guys may already be getting questions from customers like: ‘Can you guarantee supplies?’ Can you manufacture in-house?
And after the Japanese earthquake those OEM customers might be also asking: “And where is your fab?”
Spot on, Ian
You’re absolutely right, Robert, opportunistic is the exact right word. Nonetheless maybe it’s a sign that the Fear of Fab which grew in the last decade is beginning to recede. I hope so. I feel it would be good for the industry if fab was back on the agenda. Wafers have to be paid for one way or another.
Only one thought:
Both TI’s and Infineon’s strategy requires that a third company buy outrageously expensive 300mm equipment / fab new, than attempt to produce some leading edge product (DRAM or ASIC) with the expensive fab. When the third party goes broke, TI will buy the used equipment at 10c on the dollar, and produce 0.25u power-management parts, that could never afford the new fab equipment, if it were not for the 10c/$ cost.
I don’t completely disagree with the assessment of fab-lite as a crazy “head in the sand” strategy. But, by the same token, TI’s and Infineon’s actions (strategy), were strictly opportunistic. The only strategy part was the way they ignored the recommendations that they invest heavily in 2007/2008 period. This created the cash buffer that enabled this opportunism.
It’s smart only as long as you are the only company doing it. But once everyone joins in it makes no sense any more.