At least two Valley companies are scrambling to find new manufacturing sources for certain specialized parts after a small, privately held foundry shuttered its San Jose wafer fab without warning.
Mixed-signal IC suppliers Exar Corp. and Elantec Semiconductor Inc. both report that the abrupt closure will negatively affect revenue for several quarters.
The foundry, owned by Magepower, is a former Rohm Corp. factory that was sold to Taiwanese investors in 1997. Foundry customers were notified of the closure by telephone.
"They indicated that their business has failed," said Linda Prosser, vice president of marketing communications at Exar, Fremont, Calif.
The foundry had been supplying end-of-life manufacturing for some of Exar's older custom-analog devices used in medical and industrial applications. Although Exar has transferred most of its IC manufacturing to Chartered Semiconductor Manufacturing Pte. Ltd. in Singapore and Taiwan Semiconductor Manufacturing Co. Ltd. in Taiwan, the company said it cannot transfer the older parts to new fabs.
"Since these products were on a last-time-buy status and require very specialized mixed-signal processes, at this time we do not anticipate a satisfactory transfer of the products to another foundry," said Ron Guire, executive vice president and chief financial officer of Exar. "This will result in a more abrupt decline in our revenue from legacy products during the next few quarters than we had previously anticipated."
Exar said it is working with customers to locate alternative sources. In the meantime, the company anticipates the production loss will reduce its fiscal fourth-quarter revenue by about $2 million, and decrease revenue by roughly $1 million per quarter in fiscal 2000. For the current quarter, Exar anticipates a negative impact to revenue of a few hundred thousand dollars. The company had fiscal 1998 revenue of $102 million.
The loss comes on the heels of Exar's sudden exit from the silicon sensors business due to difficulties in manufacturing the parts. The now-defunct foundry was one of two Elantec relied on for manufacturing its CMOS products. Until an alternative source is established, the production loss could reduce revenue by up to $1 million per quarter, according to Ephraim Kwok, vice president and chief financial officer of the Milpitas, Calif., company.
"We're moving quickly to bring up another foundry for the products affected by this shutdown," Kwok said. "We're confident that we will be able to transition the CMOS products to another foundry quickly."
Elantec, which supplies bipolar and CMOS mixed-signal ICs, posted revenue of $34.7 million for the first three quarters of fiscal 1998.