LONDON – Texas Instruments has said it plans to spend up to $1.69 billion expanding its wafer fab in Chengdu, China and adding an assembly and test operation there. The spending is earmarked to be spread over 15 years and could include the acquisition of land, the creation of facilities, and the purchase of manufacturing equipment, TI (Dallas, Texas) said.
The government of Chengdu has promised to give comprehensive support to the expansion plan, TI added saying that it announced the plan alongside officials from the Chengdu Hi-Tech Zone at a conference there last week.
TI purchased the fully-equipped 200-mm facility in the Chengdu High-tech Zone from Cension Semiconductor Manufacturing Co.in 2010. The Chengdu fab was previously operated by Semiconductor Manufacturing International Corp. on behalf of Cension and TI took on 700 former SMIC and Cension employees that worked at the site and began production of analog ICs. The purchase price of the Chengdu fab was not disclosed at the time.
TI's fab in the Chengdu High-tech Zone was previously operated by SMIC.
The investment plan does not change TI's forecast for capital spending in 2013, the company said. TI has created a formula that sets its annual capital expenditure at 4 percent of annual revenue until annual revenue exceeds $18 billion. After that capex is expected to range between 4 and 7 percent of revenue over the long term.
I think the biggest advantage is lower payroll costs. They also want to get market share in those countries and having manufacturing there seems to help. On the downside, they have a lot of issues with exporting technology and having stable operations.
We have Non-US companies investing huge dollars in the US like Globalfoundries, Samsung (Qimonda in the past). Yes, there is Intel but I do not understand why there are not more US companies taking advantage of US state incentives like Globalfoundries and Samsung do. Beside of costs, are there better tax incentives or write-offs for going abroad?
FAB Strong perhaps not.
TI is a dinosaur in the world of manufacturing. Corporate leaderships/direction is haphazard at best as to what to do with its remaining manufacturing facilities.
TI owns mostly Very Old Fabs, and spends Very little to update them.
Of the two flagship 300mm Fabs they own, one is 14 years old running analog. The other, the Richardson Fab, is filled with used equipment from Qimonda which basically TI was forced to fill after keeping the shell in Richardson empty for years.
A US manufacturing giant at one time it looks to be extinct in the future.
You call it fab-strong but please note that TI is committed to spending just 4 percent of revenue on capital expenditure. This a comparatively low figure.
ST is expected to spend $600 million capex on revenue of $8bn to $9bn in 2013, which is about 6 to 7 percent.
Also note that the $1.7 billion, which may include a significant contribution from China or may be additional to that contribution, is spread over 15 years. $100 million per year is not aggressive. $1.7 billion is not much to spend at a wafer fab site these days although it does buy you a reasonable amout of test, assembly and packaging facilities and equipment.