As the pressure intensifies on Singapore's Chartered Semiconductor Manufacturing Ltd. to improve its financial performance and gain stature alongside its larger Taiwanese competitors, the pure-play foundry last week moved to name new executive leadership and forge an alliance with processor-IP leader ARM Holdings plc.
The Chartered board promoted Chia Song Hwee to the positions of president and chief executive. Chia had been serving as chief financial officer, executive vice president, and chief administrative officer. He succeeds Jim Norling, who was serving as interim chief executive since Barry Waite retired in April.
Ho Ching, Chartered's chairman, said in a statement that Chia "is the best person to lead the Chartered team to its next level of performance and growth ... [by] bringing to the job an ideal blend of financial and business acumen, drive, and passion for success."
The change comes as Chartered struggles to keep pace with larger pure-play foundries Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC) and United Microelectronics Corp. (UMC). Chartered has posted losses for the past four quarters, while TSMC has remained profitable throughout the past year and UMC posted profits in this year's first quarter.
Because of older process technologies and higher depreciation costs associated with its more recently built fabs, Chartered must fill nearly 70% of its production lines to break even, while the longer-established TSMC and UMC have a break-even point of only 40%, analysts said.
Chartered has forecast a 40% run rate for the June quarter, far less than the 80% projected by TSMC and 70% by UMC.
The selling prices for Chartered wafers should average $1,080 in the second quarter, compared with $1,689 for TSMC and $1,184 for UMC, according to Warren Lau, an analyst at HSBC Securities Asia Ltd., Taipei.
In a conference call last week, Chia said his responsibilities will include improving fiscal results, boosting demand, and upgrading to more high-end technologies.
Part of those efforts will involve the company's agreement last week with ARM Holdings. Chartered has joined ARM's Foundry Program and has licensed the Cambridge, England, company's ARM7TDMI and ARM946E cores, which are produced on processes ranging from 0.25-micron to 90nm. The agreement also provides Chartered access to the ARM1022E core for future designs.
There are currently 43 members enrolled in the foundry program, which accounts for more than 10% of ARM's total revenue, according to program director Antonio Viana.
"Adding silicon-proven ARM cores to our SoC product solutions is an important step for Chartered's IP access strategy that provides companies with greater flexibility and freedom of choice in their system solutions," said Michael Buehler-Garcia, vice president of business development and worldwide marketing at Chartered, in a statement.
Design kits for Chartered processes are available now for the ARM7TDMI core and will be available in the third quarter for the ARM946E.
Previous partners in the ARM Foundry Program have included TSMC, UMC, and AMI Semiconductor. Unlike those foundries, however, Chartered plans to use the ARM cores as the vehicle to bring up new processes at its own fabs.
The ARM Foundry Program was established in early 2000 as a method of providing ARM's smaller fabless customers with access to its cores for upfront fees less than those paid for unlimited licenses by larger companies such as Intel, LSI Logic, Motorola, and Texas Instruments.
"We qualify our cores on the processes of either TSMC, UMC, Chartered, or AMI, and then it's up to the foundries to differentiate themselves as far as services," Viana said. "The customers can then make the decision as to which foundry to utilize.
"Fabless semiconductor companies aren't generally in the position to go through an ASIC flow and want to follow a customer-owned tooling methodology and manufacture with a pure-play foundry," he said. "We needed a business model that satisfied those customers and we couldn't expect them to justify the ROI calculations for an unlimited-use license."
Viana added that ARM is experiencing growing demand, particularly in Europe, for its foundry program and intends to extend it to other foundries.
"We're seeing a lot of what at one time were called second- or third-tier foundries starting to really come to the forefront," he said. "Customers are demanding that these foundries improve their offerings, and as that trend continues our customers will demand more choice."
Even some larger semiconductor companies with in-house manufacturing capability are deriving benefit from the expansion of ARM's foundry partners, according to Viana. Companies like Motorola Inc.'s Semiconductor Products Sector are seeking to reduce capital expenses by expanding the amount of production handled by foundries.