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IBM Micro cuts 1,500 workers, adds design division

Posted: 06 Jun 2002 ?? ?Print Version ?Bookmark and Share

Keywords:IBM? foundry? Taiwan Semiconductor? UMC? ASIC?

In a restructuring intended to create a counterweight to Asia's fast-growing foundries, IBM Corp.'s Microelectronics Division announced Tuesday (June 4) a major push into the high-end foundry business, and said it would lay off 1,500 engineers and technicians from its older manufacturing operations.

The foundry push promises to heighten competition for Taiwan Semiconductor Mfg and United Microelectronics Corp., which have rushed to bring up 0.135m process technology ahead of other foundry players. IBM has manufactured chips on a foundry basis for several years, and counts Qualcomm Corp., Xilinx Inc. and others as major customers.

But until the current downturn, IBM had little capacity to devote to foundry work as it struggled to meet demand from ASIC customers and to make chips for the game machines of Nintendo Ltd.

That will change in early August when IBM brings up initial manufacturing at its first 300mm wafer fabrication facility, located at East Fishkill, New York.

In a telephone interview, Michael Mayer, general manager of IBM Microelectronics, said that IBM is in some areas de-emphasizing development of its own standard products which might compete with those from leading-edge fabless companies.

Last year, IBM sold its optoelectronics group to JDS Uniphase Corp. and decided to cease further development of wireless chips sets, power amplifiers and some other standard products.

"We have a three-pronged push. We want to continue to grow our ASIC business, center our standard product offerings around the PowerPC, and really strengthen our high-end foundry business," Mayer said. "In foundry, we intend to concentrate on those high-end customers who need the technology leadership that IBM can provide them."

Michael Concannon was named vice president of IBM's newly formed foundry and manufacturing services business unit as part of the restructuring.

Product development pared

Mayer declined to be specific about layoffs but said they would include some development groups for products that are being discontinued.

About 950 of the 1,500 workers affected by the layoffs announced Tuesday are manufacturing engineers and technicians who work in Burlington, Vt. While they are not fab workers, most of the affected employees support the aluminum-based manufacturing lines there, Mayer said.

A smaller number of engineers will be laid off from development groups for products being discontinued. About 200 people at East Fishkill and about 100 at the company's facility in Endicott, New York, are also being cut. Others are dispersed throughout other IBM sites.

The 1,500 employees who are losing their positions may apply for openings elsewhere in the company, so the final number of reductions is expected to be less than 1,500, an IBM spokesman said. After the layoffs, the microelectronics division will employ 19,000.

Mayer said he believes the 300mm fab in East Fishkill has the world's best fab control and automation technology. IBM also believes it has a lead in combining copper interconnects with a low-k dielectrics at 0.135m design rules. By early next year, IBM is expected to begin offering 90nm (0.095m) technology, though Mayer declined to say when the company will start offering that next-generation process.

Mature view

IBM's new foundry focus was lacking in the past, Mayer said. "There was a point in time where we tried to assess whether we could penetrate the standard product areas, mainly in networking and communications. As we have matured our understanding of the market, in the standard products area we want to concentrate on PowerPC and related product areas like Infiniband and network processing.

"Then what we want to do is be a major player as a high-end foundry, really using our process leadership and ride our core competency there, partnering with leading-edge fabless companies," Mayer said.

The company's silicon germanium BiCMOS, and silicon-on-insulator (SOI) technologies will be included in the foundry effort, he said.

IBM also announced Tuesday the formation of a design services business unit within the overall technology group. With an initial 600 employees, the design services group will develop systems and board-level products for customers, and design chips for customers of IBM Microelectronics' ASIC division. It will also provide design, test, verification, prototyping and manufacturing services for chips, boards and systems.

Employees from IBM's server and microelectronics divisions will be transferred to the design services business unit, which will be headed by Pat Toole, the former vice president in charge of IBM's customer-owned tooling manufacturing operations.

The moves come a day after IBM and Hitachi Ltd formally agreed to a joint venture that will transfer much of IBM's magnetic drive division to Hitachi. The Japanese company will pay IBM $2 billion for its hard-disk drive assets, which were part of IBM's technology group.

? David Lammers

EE Times

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