BERLIN Russia’s JSC Sitronics has some ambitious plans: It wants to leapfrog generations of semiconductor technology and spark activity that will launch Russia’s modern chip industry.
Driving those plans is Mikron, a former Soviet-era fab now in Sitronics’ microelectronics unit that recently upgraded to 0.18-micron manufacturing process technology with the help of Europe’s leading IDM STMicroelectronics NV. Mikron began production at that node in 2007.
Sitronics recognizes that there is more catching up to be done and the latest effort is an ambitious plan to create a 65- going on 45-nm 300mm facility, independent of the Mikron fab, called Sitronics Nanotechnology. The Russian government has agreed to co-fund it through a 27 billion rouble (about $1 billion) contribution. The long-term commercial success of these two efforts will arguably shape the development of Russia’s semiconductor industry.
The projects carry a hefty responsibility, and the man in charge of them is Gennady Krasnikov, the head of Sitronics’ microelectronics division as well as Mikron’s CEO.
So far, Sitronics is proving that chipmaking is a viable industry in Russia. Though overall the company is running at a second half $20 million net loss, that figure reflects a 75 percent debt reduction at the end of the second half. Thanks mainly go to Krasnikov’s microelectronics unit, which saw year-on-year second half revenues soar 82 percent and profit nearly double, outperforming all the other divisions. Krasnikov, who also recently joined the leadership council of the Global Semiconductor Alliance (formerly the Fabless Semiconductor Association), spoke to EE Times about his company’s plans to enter the global chip market and about Russia’s semiconductor industry in an exclusive interview.
EE Times Europe: What are the factors behind the second half 2008 increase in revenue and profit in Sitronics’ microelectronics unit?
Krasnikov: This increase is a combination of our upgrade program that we started several years ago during the general stabilization in Russian industry.
After the economy became disrupted [in the 1990s] along with the destruction of the supply system, our solution was to build a full-cycle production supply chain with a product that could fulfill demand on the domestic market.
With the 0.18-micron EEPROM technology that we acquired from STMicroelectronics, we counted on smart cards and finally this strategy has justified our expectations. After testing [RFID ticketing cards] for the Moscow underground system in 2007, we increased our sales to 25 million units per month in 2008.
We regard RFID technology as a promising niche to develop in Russia and the Commonwealth of Independent States (CIS), so we are planning to extend our product line to other applications. Smart Technology, another company in our [microelectronics] division, was established in 2005 and in 2007 it sold more than 30 million SIM cards for mobile phones. And, of course, we continue to support our traditional export branch with analog power-management devices, so long as we have stable demand from Southeast Asia.
EE Times Europe: What percent of revenue growth is expected in the microelectronics unit for the full year 2008 and why?
Krasnikov: In the last two to three years, Mikron has seen a very high growth rate and in 2008 we are also expecting high growth in revenue of more than 30 percent for the full year. We hope to extend our share in the CIS smartcards market. Also our Smart Technology division has recently obtained Visa and MasterCard certificates.
At the same time we are discussing with the government possibilities for growing the domestic market for our products. One prospective area is using RFID technology for a national passport or driver’s license.
The second driver of our growth is the growth of the overall Russian semiconductor market in 2008 – about 18 percent.
Mikron currently has more than 500 active customers in its database. About 70 percent of our sales are to trading companies, 30 percent are direct sales. Big customers are the Moscow subway system and mobile operator MTS [which is owned by JSFC Sistema, the parent group of Sitronics]. Other big customers are distribution companies in Russia, China and Taiwan.
EE Times Europe: What is the estimated size of the annual semiconductor market in Russia today?
Krasnikov: About $850 million to $900 million for ICs without smart cards or discrete components. The biggest segments are communication, then industrial, then government. It is not like the world market with computers, communication and consumer as the biggest segments.
The Russian market for electronic systems is $25 billion to $35 billion. Here the biggest segments are communication, computers, industrial and consumer. In these segments, the biggest part is imported into Russia as end-user devices. Therefore, the Russian IC market could multiply if end-user devices would be assembled inside Russia instead of importing them.
Mikron’s marketshare in Russia, if we take ICs alone, is about 5 percent. If we take ICs alone and Russian companies supplying to the Russian market, it’s about 30 percent.