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Analysis: TI fab deal is good for IC tool vendors

Posted: 06 Oct 2009 ?? ?Print Version ?Bookmark and Share

Keywords:TI analog fab? 300mm fab? IC tool? semiconductor equipment?

At first glance, Texas Instruments Inc.'s announcement that it will open a 300mm fab geared almost exclusively with used semiconductor manufacturing equipment might seem like a tough pill to swallow for capital equipment suppliers, many of whom are struggling to keep their heads above water as chipmakers continue to be conservative with spending while the industry emerges from a sharp and painful downturn.

But, say equipment executives and analysts who follow the space, the TI fab deal isn't a blow to the equipment industry. Some suggested that it might even be a positive for gear suppliers.

"I personally think the TI deal is a very good thing for the industry," said Jackie Seto, VP and general manager of Lam Research Corp.'s Reliant and MEMS Business. Not only does the TI deal mark the first movement of the analog chip sector into the 300mm arenawhich could open up new equipment sales opportunitiesit also gives the equipment vendors an opportunity to secure new service agreements on the used tools, Seto said.

TI said it plans to open a 300mm analog fab in Richardson, Texas. The facility, dubbed RFAB, will be equipped with tools TI is purchasing for $172.5 million from bankrupt DRAM supplier Qimonda AG's 300mm fab.

As a group, capital equipment suppliers have been hit hardest by the semiconductor industry downturn which emerged last year. According to market research firm Gartner Inc., worldwide semiconductor industry capital spending is projected to decline by 47.9 percent to $22.9 billion this year. The opportunity to sell brand new 300mm tools into the 1.1-million-square-foot RFAB would have meant a welcome boost to vendors.

But executives and analysts argue that the TI deal did not cannibalize the market for new tool sales, saying TI would not have moved to begin equipping the fab had it not been able to secure the equipment from Qimonda at a bargain price.

Kevin Ritchie, senior VP of the Technology and Manufacturing Group at TI, told EE Times that if not for the deal that netted the company 330 fab tools for the bargain price of $172.5 million, TI would have eventually opened RFAB as a 200mm analog fab.

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