LONDON ( ChipWire) -- LSI Logic Corp. is preparing to expand its use of outsourced manufacturing. The company could outsource up to 25% of its manufacturing requirements within three to five years, said Bruce Entin, vice president of worldwide marketing, at an industry conference this week.
LSI Logic first signaled a change in strategy in May when it agreed to license its G11 0.25-micron process technology to Silterra (Malaysia) Sdn. Bhd., a startup pure-play wafer fab subsidiary of Wafer Technology (Malaysia) Sdn. Bhd. funded by the Malaysian government (see May 19 story).
Entin said he expects Silterra will also license LSI Logic's next-generation G12 0.18-micron process technology and added, "We intend to go beyond Silterra, perhaps have several licensed fabs, and get 15-25% of manufacturing output from foundries within three to five years."
LSI Logic's use of foundries will make no difference to customers, according to Entin. "The customer gets the same product as if it came from an LSI Logic fab. After all, it's our process," he said.
Entin added that the new policy would give some customers the security of a second-source capability and provide flexibility and a useful capacity buffer for Milpitas, Calif.-based LSI Logic. Silterra's fab, located in a technology park in the northern Malaysian city of Kulim, is to be an exact copy of LSI Logic's fab in Gresham, Ore. It is expected to be running by the first quarter of 2001.
LSI Logic's marketing vice president dismissed contentions that lower-cost manufacturing at foundries, which sometimes receive state subsidies, could eventually drive out internal manufacturing at LSI Logic. "It would take a very long time. We'll stick to a low-percentage outsourcing model for now and re-evaluate in a few years' time," he said.