Xilinx invests in China

Programmable logic vendor Xilinx Inc. will disclose details this week of an investment it has made in He Jian Technology Co., a foundry in Suzhou, China, saying it may one day need the foundry to lower the cost of its chip production.

The disclosure comes as Xilinx and other chipmakers are trying to bolster their presence in mainland China, both in sales and manufacturing. In the last fiscal year, sales of PLDs in China and other Asia-Pacific countries made up 24 percent of Xilinx's revenue - up from 14 percent the year before.

Xilinx does not immediately plan to manufacture chips at He Jian Technology, though it is considering using the foundry at some point to lower the cost of making chips that don't need cutting-edge process technology. Xilinx, like many U.S.-based chip companies, relies heavily on Asian companies to manufacture its devices.

As more low-cost production capacity comes on stream in China and elsewhere, fabless chip companies like Xilinx need to consider adjustments to their manufacturing plans to better compete, said Sandeep Vij, VP of marketing for Xilinx, based in San Jose, California.

Tariff relief

"We want to understand this and see how this plays into our own model," he said.

Moreover, taking a stake in a Chinese fab could lower the tariffs that foreign chipmakers must currently pay to sell their products in China. "You have to produce to get some relief [from tariffs]," Vij said.

Xilinx said it made the investment in He Jian 18 months ago. The company declined to disclose the amount of the stake.

- Anthony Cataldo

EE Times