ST Micro signs tech transfer deal with Sitronics

MOSCOW — Sitronics signed an agreement with ST Microelectronics to transfer technologies for producing 0.18-micron chips at the Zelenograd-based Mikron plant, according to the Russian-language CNews.ru site.

"The deal includes design kits which will enable us to conduct independent research", said Sitronics General Director Evgeny Utkin. "The deal also includes training for more than one hundred of our specialists – designers, technologists and engineers."

Sitronics together with STM will promote the products on the market. "This partnership will allow us to create a single production chain from microcircuit design to finished products at our own enterprises," said Utkin.

The agreement was signed within the framework of Sitronics' original project to create a smart-card production run last March. That project was with Giesecke&Devrient (Germany) equipment at Sitronics' enterprise in Zelenograd.

The agreement with STM is the final step towards Sitronics launching a 0.18-micron line for a smart card assembly line in partnership with Infineon (Germany).

The domestic IC fab will obviate purchasing chips from foreign manufacturers.

"Cooperation with STM will allow us to fairly quickly develop and introduce in the market ready-made products," said Gennady Krasnikov, Sitronics' manager for microelectronics business solutions. "Our production is primarily targeted at the local rapidly growing markets."

According to Sitronics estimates, the Russian sim-card market amounts to 100 million cards annually.

Smart cards at the Micron Plant in Zelenograd has a capacity of 18,000 200-mm wafers annually. Sitronics' investment into the project will be $200 milliom, of which $50 million has already been invested. Further investments will be made to purchase equipment, create infrastructure, train specialists and acquire the lacking technologies.

The company plans to start mass chip production in 14 months. "The project and investments for it are already supported by orders for the next 3-5 years," said Utkin.

According to the Elektronika Publishing House, the volume of the Russian electronic components market in 2005 was $1.28 billion. The average share of Russian manufacturers is 10-15 percent, and in some segments it practically dropped to zero. The volume of the world market is almost 200 times larger – $250 billion.

Sitronics believes that the creation of such production is a project of state importance. "It is a question of re-creating an industry that we have lost," said Utkin, who commented that this deal should be an imputus for state-contracts. "It is impossible to reach the world level and overcome the lag in technology without state support. We hope that our investment in industry development and creation of a modern technological base to ensure Russia’s own production of digital microchips will help us get preferences in the form of state orders."

It should be noted that in the past 15 years the development of Russian microelectronics industry was actually frozen. The absence of demand for end products and the lack of investment have led to increased lagging behind the world leading microelectronics companies.

According to the Russian Federal Agency for Industry, 40 percent to 50 percent of the domestic technologies developed in 1970s-1980s have been currently lost. Officials acknowledge that it is impossible to produce competitive high-tech products on the basis of the country’s electronic technologies. As for the private companies, they see no sense in making investments in the absence of guaranteed sales of end products.

Recently, the Russian government has been expressing concern about the high level of dependence of Russian IT infrastructure on foreign technologies. Thus, in early June 2006, the Russian Security Council suggested a number of steps that would help the country recreate its own element base and regain its positions in various hi-tech sectors, including microelectronics.

Sitronics hopes to become the "crystallization point of Russian microelectronics", having in mind making money as well.

Sitronics is a hi-tech subsidiary of the Joint-Stock Financial Company "Sistema" (AFK Sistema). Its income in 2005 was $954.9 million, and total assets $567.8 million.