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Japanese trio mulls joint fab plan

Posted: 16 Feb 2006 ?? ?Print Version ?Bookmark and Share

Keywords:yoshiko hara? IC foundry? SoC design? Hitachi Ltd? Ranesas Technology Corp.?

After more than a year of private discussions, three Japanese companies went public with plans for a feasibility study on a joint fab. While the work is only in the planning stages, a completed fab might serve to revitalize Japan's fading presence in the world IC arena.

Hitachi Ltd, its affiliate Renesas Technology Corp. and Toshiba Corp. announced that they have "initiated a joint study on the feasibility of an independent IC foundry business offering advanced fabrication. The joint study will consider the establishment of a planning company."

Details of that company's structure have not yet been outlined, according to the statement.

When the talks were started early last year, the intent was to put together plans for a joint fab that would energize Japan's IC industry through the establishment of a foundry for large-scale SoC designs. Major semiconductor players in Japan would pool their resources to build it, contributing engineers, technologies and money.

It was thought that if such a fab could be operated as a pure, independent foundry, open to any potential customer worldwide, it would be able to compete with such mighty rivals as TSMC. The idea was strongly backed by Japan's Ministry of Economy, Trade and Industry (METI).

Talks for such a venture have dragged on for nearly a year, however, according to newspaper reports compiled from fragments of leaked information. And while the concerned parties originally intended to establish a preparatory company, the plan was derailed by disagreements within the group and a personnel change that moved a key official at METI who strongly backed the plan.

In the most recent round of developments, Toshiba has emerged as a central mover in Japan's IC industry, partnering with NEC Electronics Corp. and Sony Corp. in other ventures. "Toshiba's presence has been increasing," said Hiroshi Yoshihara, director and senior analyst in the research department of Merrill Lynch Japan Securities Co. Ltd. "In fact, Toshiba has the key position in Japan's semiconductor industry reform."

Other partnerships
NEC approached Toshiba last November and the two companies agreed to form a partnership for joint development of 45nm-node technology and to consider eventually expanding the partnership to a production level. NEC is expected to see its sales drop 3 percent in the fiscal year ending in March 2006 and to see a loss of about $170 million in that time.

Toshiba is also partnering with Sony to develop 90-, 65- and 45nm process technologies, and both have been collaborating on large-scale integration production for Sony Computer Entertainment's Playstation 2. The two companies also partnered with IBM Corp. in the development of the Cell processor.

NEC will have a much closer relationship with Toshiba than Sony will, however, since their partnership is expected to involve the actual integration of each company's semiconductor operations.

This time around, Toshiba will work with Hitachi and Renesas. Renesas is a joint-venture company formed by Hitachi and Mitsubishi Electric Corp., with Hitachi holding a 55 percent stake.

But while Toshiba may be an investor in this joint foundry plan, it does not intend to be involved in management, said a Toshiba spokesman.

Katsuhiko Shoyama, president and CEO of Hitachi, has been the main driving force on the industry's side for the joint foundry attempt. Hitachi recently promoted Shoyama to chairman of the board, although he will retain the position of CEO. The company also appointed a new president, Kazuo Furukawa, who will assume his position in April.

At the announcement of the management change, Shoyama said, "I hope the joint fab issue will be settled before I become chairman in April." Furukawa supported Shoyama, saying, "That is an issue concerning Japan's electronics manufacturers' competitiveness in the world market. For businesses that need huge investments such as semiconductor ventures, I believe a joint fab is necessary."

Hitachi expects to see an 11 percent drop in sales this fiscal year compared with the previous year, and is expected to end up in the red.

Meanwhile, Toshiba has to continue making big investments in its NAND flash production facilities to remain competitive with Samsung Electronics Co. Ltd. Thus, the scale of its investment in the joint fab venture is expected to be smaller than originally intended.

Final capacity
At present, the company expects to invest somewhere between $849 million and $1.6 billionnot enough to build a 300mm fab. The success of the new foundry will also depend on its final capacity.

"If the scale of the fab is limited to a capacity of 10,000 wafers a month or below, it wouldn't be cost-competitive at all in the world market," said Koki Inoue, senior economist at the Economic Research Institute, which functions as a think tank for METI. Inoue proposed the need for an independent logic foundry in a report he submitted last April.

Hisao Baba, the president of TSMC Japan KK, was more specific. A capacity of "about 30,000 wafers a month is required to be successful as a foundry," Baba said.

Instead of holding a press conference, the companies chose to distribute a simple statement "to explain the situation clearly" and halt "rumors," said a Hitachi spokesman.

The low-key approach may be due to the changing fortunes of Japan's major semiconductor players.

Undeniably, weaknesses in Japan's IC industry have limited the companies involved and slowed the project's momentum. So after nearly a year of effort, only time will tell if the joint fab will actually be built or if the companies' plan "to study the feasibility" of such a venture is merely a trial balloon.

- Yoshiko Hara
EE Times

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