Though a deal to share Dresden is far from complete, several Motorola executives noted that AMD uses a licensed Motorola 0.18-micron process with copper interconnects at the German fab, and that would make it relatively easy for the two companies to coexist there.

"It is AMD's fab, and it is up to them to decide if they need all of it for the Athlon processor. We could certainly use the capacity, and because we already use the same process, it would be relatively easy for us to share capacity," a senior Motorola official confided.

Motorola also is angling to create an alliance to cooperatively develop a solution for embedded DRAMs, said Hector Ruiz, president of the company's Austin-based semiconductor group. For the near term, Motorola will continue to work with United Microelectronics Corp. in Hsinchu, Taiwan, whose embedded-DRAM technology Motorola plans to use in a third-generation (3G) wireless-phone chip set, to be produced by UMC's foundry services.

Embedded DRAM is needed for the video processing required in 3G handsets.

Further out, Ruiz said he wants "the major logic vendors who do not have DRAM technology" to join hands in finding a way to solve the embedded-DRAM cost and performance equation. He said Motorola already is talking to several companies, which he declined to name, that find existing approaches too limiting in terms of performance and costly as well.

Perhaps five years or more ahead, Motorola also wants to propagate an entirely new approach -- the magnetoresistive RAM. "We think that is a technology that has the potential to replace all memories: DRAM, static RAM, non-volatile. It may take five years, but we are pretty excited about it," Ruiz said.

Semiconductor analyst Will Strauss, president of Forward Concepts in Tempe, Ariz., said the turnaround at Motorola has been remarkable. Motorola's Semiconductor Products Sector is enjoying strong demand across all of its product lines.

"At the last Horizons two years ago in Orlando, Fla., nobody knew the direction. There was a lot of uncertainty and discontent, and stability has not been there for the past two or three years," said Strauss. "Between the combination of Hector Ruiz and Fred Shlapak, they finally have the right combination of management. And besides the foundry strategy working out for them just when they need it, Motorola has some real good products."

Specifically, Strauss cited the G4 Altivec processor being supplied to Apple Computer Inc. and the Star*Core with PowerQuicc combination (see Sept. 13 story), calling the latter product "really world-class. For certain networking applications, it is more powerful than anything out there right now, though I'm sure Texas Instruments has something in the back room," Strauss added. "For the first time in many years, Motorola has got some products that they can really crow about."

Moreover, the semiconductor market is far more upbeat than just eight months ago, when the company was shutting down 15 older Motorola fabs and locking up 0.25-micron capacity at Taiwan Semiconductor Manufacturing Co. (TSMC) and other foundries.

"Last year we were doing everything we could to get cost out," said Bill Walker, a senior vice president in charge of manufacturing. "Now, we are ramping capacity as fast as possible. The lead times on equipment are much longer, but there is no doubt we could use more capacity, as quickly as we can ramp it."

And while much attention has been paid to Ruiz's pledge to move 50% of the sector's overall production out to foundries by 2002, Motorola is moving just as quickly to add wafers at its own fabs. Large, underutilized fabs at Phoenix and Austin, MOS 12 and MOS 13, are being filled as quickly as possible for 0.25-micron and 0.18-micron production.

As of September at Motorola's joint-venture development lab, SC300, also in Dresden, partner Infineon Technologies AG was using 300-mm wafers to manufacture commercial 64-Mbit DRAMs, at yields of 70% or more. Walker said that once a full tool set for 300-mm production is complete, Motorola will move to build a 300-mm line at West Creek, near Richmond, Va. (and across town from White Oak, a DRAM manufacturing facility now operated by Infineon but partially owned by Motorola, which does not use it for its own manufacturing).

Motorola has secured all the building permits for West Creek, qualified contractors and put a small team in place. Once all the lithography and other tools are ready, the company could be manufacturing devices at West Creek within 15 months, or early 2001.

Walker said he expects a favorable decision by year's end on plans to equip a front-end fab building at Tianjin, China, that has been on hold as far as wafer fabrication is concerned. That fab would be used to supply Motorola's extensive wireless and paging business in China with ICs produced at 0.35-micron design rules, the government-set limit on equipment exports to the People's Republic, Walker said. He added that he is optimistic about getting a green light from Ruiz on Tianjin.

At this week's Horizons briefing sessions, Motorola executives exulted over their ability to take over the Tohoku Semiconductor joint venture, started 15 years ago with Toshiba Corp. in Sendai, Japan. Toshiba, which had run DRAMs in its half of the building, decided to consolidate memory manufacturing at larger facilities, giving Motorola the option to purchase Toshiba's share for logic production. The deal was consummated earlier this week.

Walker said Tohoku represents about 20,000 wafers per month of 6-inch capacity that is needed for automotive and microcontroller production. Another large building currently processes about 10,000 eight-inch wafers per month, and that facility will be filled out and upgraded to tighter design rules this year.

Motorola now gets fully 30% of its total wafer fabrication, packaging and test, from foundries and contract test and assembly houses. That is well ahead of the 24% goal that was expected by this time, an acceleration driven by demand.

Greg White, general manager of the microcontroller division, said MCU sales are expected to increase 45% this year. Asked if Motorola would need to put its customers or distributors on allocation, White said, "I went through the upturn in '93 and '94, and we are nowhere near that in terms of capacity limitations. Right now it is hard to keep up, but we are getting more capacity from our foundry partners. And Motorola is moving a lot quicker than in the past to tighter process geometries, from 0.5 to 0.35 and to quarter-micron, where we want the bulk of our production to be."

"We made the decision early this year to lock in a tremendous amount of foundry capacity," said Wayne Nesbit, a vice president and director of worldwide external technology. "Our foundry partners had invested pretty heavily during the last downturn, and we moved early enough to secure wafers."

Early this year, said Nesbit, Motorola's management was trying to figure out how to fill its capacity. "We were twiddling our thumbs in January, and then the rebound came on all of a sudden. By March we didn't know if we'd have enough capacity, and Motorola went into full-speed-ahead mode. Had we not had our foundry capacity, and had we not built new factories in Austin and Phoenix that were underused, we would not have had the success this year that we have had."

Nesbit, Motorola's point man for foundry strategy, said much of the company's foundry capacity now comes from a network of smaller foundries in Japan, Israel, Canada and the United States. In addition, by running its own fabs round the clock at higher efficiencies, Motorola "squeezed out the equivalent of two new fabs from internal production."

Production at foundries will triple for Motorola this year, but the unit increase in square inches of processed silicon will be much larger at Motorola's own fabs, which still account for 70% of production. Walker said he expects that by year's end, wafer production will have increased by 50% over 1998 -- "the sharpest upturn in the 34 years I've been in the industry."

TSMC is the largest foundry supplier by far to Motorola, Nesbit said, but the company also has had a long relationship with UMC. Singapore foundry Chartered Semiconductor Ltd. currently does a relatively small amount of production for Motorola. Nesbit said Chartered is expected to begin supplying Motorola with significant production capacity by the end of next year, using Motorola's licensed HiperMOS process.