Freescale won't go fabless despite downturn

As a vendor with a broad product portfolio and activities in very different market segments, Freescale Semiconductor faces challenges from many sides. EE Times Europe had the opportunity to meet Freescale's EMEA general manager Steve Wainwright for a tour d'horizon.

EE Times Europe: Freescale always said "we never go fabless". In the light of the current market conditions and the necessity to cut costs, is Freescale sticking to this position?

Steve Wainwiright: We haven't changed our mind. We have spoken for a long time about a fab-lite strategy where we have a mix of own assets and external ones. That's still very much the picture. What you will have seen is that we have announced the plan to move some of our manufacturing from 150mm to 200mm. This involves closing the Sendai plant in Japan.

And we made an announcement about an intention to close Toulouse. This means we have started the related process in France. We have to go through this process before we will be able to announce a firm closure date. But there is an outlined plan targeting closing both fabs mentioned by the end of 2011. We plan to move these productions into other sites inside Freescale which are 200mm/8-inch fabs. That plan has a certain inevitability in it because 6-inch fabs are challenged to be cost-effective. The current crisis and the fab loading have accelerated that plan.

In terms of what we need to do, the mix of manufacturing we need, we envisage that for many years to come we will continue to have our own fabs. After all, we are involved in a broad range of products from multicore 32bit RISC processors to analog processes in older technologies and to MEMS which are different again. This is a broad range of products that we need to manufacture either ourselves or through foundries.

What exactly are your plans for the Toulouse manufacturing site? Freescale wants to complete that process by the end of 2011.
To be precise: We are currently in negotiations with the work council and other parties like government around the conditions for such a closure. We have announced the intention but we have not yet announced the firm closing date yet because of the process we have to go through.

How many employees will be affected by the measure?
This is an interesting question, because there are several elements in it. Toulouse is a big site. There we have an analog design center, a MEMS design center, marketing people, quality assurance and more. At the site work a bit less than 1600 people in total, with about 900 of them we see as leaving the business when we are complete with the process by the end of 2011.

Do you also have plans to cut down on R&D activities in Europe?
No. In the last years, our R&D has been running at a level of about a billion dollars and we plan to continue at that sort of rate. The thing to remember is that we plan to leave the cellphone business. One of the results will be that in real terms and proportionally we will be able to invest more in our core markets which are automotive, networking, industrial and some specific consumer opportunities.

In the cellular business we got into some problems because of the size of scale. It was impossible to invest enough in R&D given the scale of our business; what we were able to invest was not enough to get the progress we needed.