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Opinion: Infineon has bigger problems than relocations

Posted: 12 Jun 2009 ?? ?Print Version ?Bookmark and Share

Keywords:Infineon production relocation? manufacturing? 65nm?

Infineon Technologies AG is moving another part of its production activities from Germany to the Far East and will further move parts of its backend from Malaysia to China. Is the company tiptoeing out of its backend activities!and perhaps, eventually, out of its Europe-based production activities?

The current moves might raise the question if they perhaps might be part of a secret migration strategy or even triggered by crisis-related difficulties at the company. However, there is no reason for alarm. Infineon has communicated!and continues to do so!that it plans to avoid the huge costs associated with manufacturing in geometries of 65nm and below. While Infineon's time frame is still unclear, this strategy will eventually translate into a withdrawal from all front-end manufacturing activities for the respective geometries.

The current moves however attack at a different place in the value chain. And both moves!the transfer of backend activities from Malaysia to China and the transfer of some power module production backend to South Korea!have to be treated separately.

The relocation of backend activities from Malacca to Wuxi hints that the technology in question has approached a high degree of maturity. The reason why these activities have been transferred to China is quite a normal thing: Cost management!an aspect of semiconductor manufacturing that now, in times of crisis, has become rather important for any chip vendor, not only the notoriously hard-up Infineon.

Similarly, the company also is moving the backend activities for certain power modules to Korea. In this case, the action calls for more attention in Europe since it is about transferring a part of the value chain away. About 25 jobs in Infineon's Regensburg plant are affected, which in the current crisis would be bad enough if the company really would make them redundant. However, Infineon asserts that the workers in question will be assigned to different tasks in the same location. All in all, the Korean engagement increases Infineon's chances to sell its products in the Asian markets and thus to improve its profit figures.

Problems however are building up for Infineon from a completely different side. Currently, the German government seems to suffer from a financial hangover that can be traced back to its undue munificence in the Opel case. As a consequence of its premature commitment in this case it has called up covertness from many!too many!almost-bankrupt companies. This situation currently generates an attitude to deny any state aid to any company, no matter if it is a provider of critical high-tech expertise or a department store with no relevance for the technological competitiveness (but many jobs).

And it is a known fact that Infineon still is struggling to get the millions of euros together necessary to redeem its debts. This problem is far from being solved. It might have nothing to do with the current eye-catching relocations in Far East, but it is by far the more important issue. If the company should fail to gather this funding, questions about some backend relocations would be irrelevant anyway.

- Christoph Hammerschmidt
EE Times Europe

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