Is a new business model in the works for small foundries? 

by Debra Vogler, Senior Technical Editor
WaferNEWS


A few weeks ago, before the bustle of SEMICON West, Silterra announced an extension of its JDP with IMEC to create a foundry-compatible 90nm CMOS process technology, with the intent to further scale to 65nm. A 110nm derivative will also be developed in parallel. A 130nm process, the fruit of a previous joint effort, is already in production at Silterra. WaferNEWS caught up with Silterra president and COO, Tzu Yin Chiu, to get the latest on the foundry's plans. 

"Our goal is to have the 110nm node, which is a cost-reduction version of the 130nm process, ready for pilot production by mid-2008," said Chiu. "It will be followed by the 90nm process in the second half of the year and the 65nm technology a couple of years after that." 

At the present time, the foundry sees the sweet spot for its business at the nodes between 180nm and 130nm, although Chiu added that customers are starting to shift to the more advanced nodes. 

When asked to consider the possibility that the industry's drive to consolidate will start hitting the smaller foundries, Chiu predicted that there will be winners in the second tier as well. "The winners will be those with the right customer set, the ability to follow technology, and who can provide a complete IP offering," said Chiu. "The smaller foundries will look for partners with complementary strengths." 

WaferNEWS also caught up with IMEC's VP of business development, Ludo Deferm, about the competitive landscape that foundries large and small will face going forward. Deferm believes that the smaller foundries will have to make strategic alliances with either smaller IDMs or with the large foundries, where they can offer capabilities that the larger foundries do not want to offer. "Going forward? I don't think small foundries can maintain their presence as single foundries without any alliances unless they are manufacturing very specific devices that have some [manufacturing] volume," he said. 

To remain competitive, the smaller foundries must make a difference, Deferm added -- either in process technology, or offer something more. "If they can only offer process technology, they have to go to specific processes," he said. "But this doesn't mean scaling, rather a combination of special MEMS devices, analog devices, and the like." Smaller foundries could also offer what Deferm refers to as customer-specific design options combined with the foundries' own processes. For example, a foundry could offer a combination of IP designs linked to their process technology (e.g., IP blocks, or larger area blocks for drivers, analog, and even for display applications) where it is possible for customers to order significant numbers of wafers. 

Emphasizing the differences between an alliance and a partnership, Deferm told WaferNEWS that in an alliance, the specific member company does not define the strategy? It’s defined by the alliance partnership. "In an alliance, you share means, resources, and investments...this is completely different from the usual customer/supplier relationship," he said. "These alliances are more than just a contractual relationship." 

However, partnerships may not always be as straightforward because of the myriad structures that are possible. Deferm pointed out that in a partnership, a company might only sign a contract for a specific product without making a commitment for anything more. Clearly, the evolving business models that foundries of all sizes need to consider will only get more complicated.


About Silterra Malaysia Sdn. Bhd.:

Market demand driven, SilTerra Malaysia Sdn Bhd is a semiconductor wafer foundry offering major foundry compatible CMOS logic, high-voltage and mixed-signal/RF technologies down to 0.13-micron feature size. This includes complete, competitive contract manufacturing for fabless and IDM customers’ designs. SilTerra’s wafer fab has a design capacity of 40,000 eight-inch wafers per month.
Environmentally vigilant, SilTerra delivers award winning, world-class performance to its customers seeking flexible capacity, competitive advantages and around the clock customer support. SilTerra is ISO 9001:2000 and ISO 14001 certified. Founded in 1995, the company’s headquarters and factory are located in Malaysia’s Kulim High-Tech Park, and SilTerra has sales and marketing offices in San Jose (California) and Hsinchu (Taiwan). For additional information on SilTerra or its services, please visit www.silterra.com.