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Dongbu aims to be analog foundry powerhouse

Posted: 02 Nov 2009 ?? ?Print Version ?Bookmark and Share

Keywords:foundry? analog? mixed-signal? CMOS?

South Korea foundry Dongbu HiTek Co. Ltd is looking for respect in the foundry business and aims at being the "TSMC" in analog and mixed-signal.

Dongbu HiTek, based here, has a ways to go to be mentioned in the same breath as silicon foundry giant Taiwan Semiconductor Manufacturing Co. Ltd, but the Korean company appears to be pointed in the right direction.

In interviews with top executives, Dongbu HiTek outlined its strategy. The company has recently bolstered its management team, accelerated its process development efforts and put its fab in order.

It has also quietly rolled out the two critical and missing pieces in its process technology portfolio: AN180 and BN180. AN180 is a 180nm analog CMOS foundry process, while BN180 is a 180nm medium voltage technology.

Simply put, Dongbu HiTek has finally found its niche. At one time, the company hoped to compete in the gallium arsenide (GaAs) and DRAM markets. It even made a laughable attempt to compete in the leading-edge foundry market against the likes of Chartered, SMIC, TSMC and UMC. And it also once made outrageous announcements about plans to build seven fabs.

After failing with those strategiesand losing credibility in the processDongbu HiTek recently took a gamble and turned its attention towards the analog and mixed-signal foundry markets.

The strategy appears to be working, as the company was ranked as the world's sixth largest foundry in 2008, according to Dongbu. "Dongbu once tried to do everything," said John Yong-In Park, president and CEO of Dongbu HiTek, at the company's headquarters. "We can't do everything. Now, we focus on things we can do better."

"We're focused on analog," added Lou Hutter, senior VP and general manager of the analog foundry business division at Dongbu HiTek. "We want to be the most respected analog foundry in the business. We are not there yet, but that's our vision."

Executives at Dongbu HiTek also know the company faces a multitude of challenges. First, the company must deliver its new AN180 and BN180 processes on time. Second, the foundry vendor has weathered the storm in the current downturn, but it also appears to be saddled with unforeseen debt.

It has also devised a somewhat controversial strategy by developing products that are sold under its own brand name. In doing so, Dongbu is moving away from being a pure-play foundry vendor. Dongbu executives claim that it is only working with a specific customer for the parts and that it is not competing with its customers.

Perhaps the biggest challenge is the competition. The company is not only competing against Jazz/Tower, X-Fab and others, but it is now going toe-to-toe against the TSMC, which is putting more emphasis in the arena.

To compete with TSMC and its vast resources over time, Dongbu may need to make an acquisition, thereby expanding its customer base. One possibility is for Dongbu to buy MagnaChip Semiconductor Ltd. South Korea's MagnaChip has just emerged from Chapter 11 and the company seems ripe for a takeover.

If Dongbu cannot reduce its debt, the company may have to do something even more radical and team up with Samsung in the foundry business over time, observers said. Some wonder if the two companies would be better served by forming a joint venture.

Samsung is competing in the leading-edge digital foundry business, but its overall efforts are disappointing. So far, Samsung has been a bust in the foundry business. With Dongbu, Samsung could have a strong analog presence.

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