TAIPEI, Taiwan Europe's largest chipmaker, STMicroelectronics, is teaming up with foundry United Microelectronics Corp. in a manufacturing and technology agreement that secures capacity for ST and pulls the two companies closer together in an effort to boost manufacturing efficiency.
The agreement seems to be just a little more than a traditional foundry-customer relationship, but a bit less than a full-blown R&D alliance that would noodle through the potential show-stoppers in future technology nodes. The companies tighter working relationship, which will include more regular engineering exchanges and shared development costs, should, however, help UMC map out smarter ways to increase yields on current process nodes.
In general, the chipmakers said they would pool resources in the areas of manufacturing performance, defect reduction, product characterization, yield enhancement and quality assurance. "Cooperative supply and manufacturin g alliances such as this are essential in order to address the dynamic market demands of the semiconductor industry," said Fu Tai Liou, UMC's chief officer of worldwide sales and marketing, and its former technology chief.
The announcement comes about five months after ST said it would forge closer R&D ties with UMC rival Taiwan Semiconductor Manufacturing Company, the world's top foundry. UMC and ST have worked closely together over the past three years ST is a top 10 customer of UMC, representing about 4 percent of sales and so the TSMC tie cast doubt on a valuable relationship for UMC.
In Wednesday's announcement, ST put to rest that uncertainty. "The teams of both companies have worked very well together over the last few years," said Laurent Bosson, ST's corporate vice president of front-end manufacturing. Liou said the companies will "broaden and extend" their relationship.
UMC declined to offer details regarding which process nodes the team effort would target, saying only that a "wide range" is under consideration. ST officials were not available for additional comment. However, many of the products ST outsources to UMC, such as printer or hard drive controllers, are handled in more mature processes.
In February, TSMC, Philips Electronics NV and ST said they would come together in a five-year development project to research and develop advanced CMOS processes, starting at the 90-nanometer node and quickly moving to 65nm and beyond. Since then, they have been joined by Motorola and NEC.
The details of the earlier TSMC-ST pact call for initial development of generic CMOS processes followed by low-power and high-performance options, including features such as embedded memory and analog signaling. "We are well on the way to having the prototype and risk-production release by the end of this year," said Jack Sun, senior director of TSMC's advanced logic technology division, at the time of the announcement.
Wednesday's deal indicates ST is pursuing more sophisticated , forward-looking R&D with TSMC while at UMC it will focus on improving process recipes for current products. That seems to indicate a clear division in the work ST does with UMC and TSMC, which are staunch competitors. Liou stressed that the agreement focused on "manufacturing and engineering activity." Instead of looking at the fundamental research and theory of, say, the 65-nanometer node, the alliance will focus on in-production technology nodes using current products from ST.
That way, the company has both bases covered and can more easily judge which company should first get outsourcing of more complex products, such as DSPs, which would cross over into .15-micron production, where neither of the foundries can yet guarantee volume yields, analysts said.
Liou downplayed the common technology development link that ST has with both UMC and TSMC, brushing aside questions about any inadvertent leakage of know-how via ST. The areas of focus are well-defined, and quite different, he said. "They migh t have some fundamental research with TSMC, but we are working on the real products for volume production," he said.
For high-end R&D work, UMC is in the process of working with Advanced Micro Devices on CPU-specific process technology that will be applied to a 300mm wafer fab joint venture in Singapore in a few years. One of its other R&D agreements, with IBM and Infineon Technologies AG, on 130 nanometer, is coming to a close, but it is in talks with Infineon to continue R&D work on future process nodes.
"You can see that the business relationship among companies will become more complicated than it was before," Liou said. "You will also see more (alliances) happen in the future. "
Under the agreement, ST will offer details of its manufacturing process, which UMC can study and integrate with its own process flow to squeeze out greater efficiencies ranging from prototyping to volume production of ST products. UMC will be able to apply that knowledge to its generic process so that other customers will benefit, too.