Fabless semiconductor supplier Cirrus Logic Inc. has signed a five-year foundry agreement with China's Central Semiconductor Manufacturing Company Ltd. (CSMC) in a strategic move to gain access to the market and take advantage of lower costs.
The collaboration will begin with the manufacture of CMOS-based mixed-signal consumer ICs, with initial products expected during the first quarter of 2002, according to Cirrus, Austin, Texas. Both companies said they expect to quickly expand to a wider range of products and services.
CSMC was founded in 1997 in Hong Kong and its fab is located in Wuxi, Jiangsu Province. The fab has a 6in. production line at a capacity of 11,000 wafers a month and a 5in. line at 7,000 wafers a month.
The agreement positions Cirrus to take advantage of China's expected membership in the World Trade Organization, according to the company. It will also provide Cirrus savings on import duties, value-added taxes, and transportation costs.
"Many of the PC manufacturers and consumer electronics manufacturers are doing their design elsewhere, but doing their assembly and/or manufacturing in China," said a spokesman for Cirrus. "The Chinese semiconductor market is doing reasonably well compared with other countries. As the Chinese market continues to grow, having a strategic vendor like CSMC will be important for us."
China is forecast to see 5% growth in semiconductor sales in 2001, the only major country expected to show positive semiconductor sales growth this year, according to IC Insights Inc., Scottsdale, Ariz.
As other countries have done, China is using semiconductor manufacturing as an economic driver, analysts said. "Most of the countries that have gone down this road have had an early phase where local semiconductor content was important," said Bob Merritt, an analyst at Semico Research Corp., Redwood City, Calif.
"The reality is, China is going to insist on local content for a lot of their semiconductors for quite a while, in order to encourage development of their own semiconductor industry," Merritt said. OR