Refusing to be outdone by competing integrated device manufacturers or made outmoded by pure-play foundries, STMicroelectronics N.V. last week sketched an ambitious manufacturing strategy designed to keep the company at the near-bleeding edge of chip- makers.
Executives from the Franco-Italian concern said they will open a 12in.-wafer-capable fab in China within three years, once ST's revenue in China reaches $2 billion"about twice the current level.
Laurent Bosson, vice president of front-end manufacturing, said once that revenue threshold is passed, the company will build a structure capable of producing 12in. wafers, although depending on circumstances the initial equipment could be for 8in.-wafer manufacturing.
"We must be in China in the next three years," Bosson told a gathering of international journalists touring ST's 12in.-wafer M6 fab here, which is under construction. "If you're above $2 billion in revenue in China, the authorities ask, 'Hey, where's your fab?' "
ST has about 600 design engineers at three sites in China, and that could grow to 900 in the next few years, he said.
The fab in China will be a copy of the M6 facility here, a 220,000-sq.-meter plant said to be the largest project currently under construction in Europe. The fab's arc-like entrance is positioned to face looming Mt. Etna. "Facing Etna will improve the creativity and productivity of our designers," Bosson quipped.
ST is quick to assert, however, that the often-used "copy exact" process strategy is not one it adheres to, instead preferring "copy intelligently" to adopt lessons learned at earlier fabs. The Catania fab, when it begins manufacturing wafers in the fourth quarter
of 2004, will adopt the 90nm process that ST is developing on a 12in. pilot line in Crolles, France.
In an interview last week, Bosson said ST will go it alone on the China project, preferring to maintain total ownership for both process-control and financial reasons.
But it is the M6 facility here (built on a World War II battlefield that yielded yet another unexploded bomb last week) and its $3 billion price tag that lends credence to ST's determination to stay with the big dogs at a time when economics would appear to favor the argument for depending more on foundries.
A number of high-fliers, including Motorola Inc. and LSI Logic Corp., for which process ownership once amounted to a sacred cow, have adopted "fab lite" strategies.
The fully automated 12in.-wafer Catania plant is expected when fully operational to churn out 5,000 wafers per week, some with more than 30 mask levels, according to Luciano Gandolfi, central front-end manufacturing vice president and ST's general manager for Italy.
Since the first quarter of 2002, ST said it has met the wafer prices of pure-play foundries stride for stride, sometimes dipping below their prices and sometimes edging above.
The company's front-end yield has improved markedly in the past five years, with yield loss and defect densities dipping to nearly 40% of 1998 levels, while productivity has risen 18% in the past four years, Bosson said.
ST forecasts that about 7% of its business next year will be for foundry customers. That level has fluctuated historically but will never rise above 20% of total production, Bosson said.
The company's capacity utilization is at more than 80% for 5- to 6in. wafers and more than 85% for 8in. wafers, which ST executives said is the operational equivalent of full capacity utilization.