WSJ - Motorola Develops New Semiconductor To Cut Electronics Manufacturing Costs
[Yes, I am really still awake right now ...]
September 4, 2001
Motorola Develops New Semiconductor
To Cut Electronics Manufacturing Costs
By ANDREA PETERSEN
Staff Reporter of THE WALL STREET JOURNAL
Motorola Inc. has developed a new type of semiconductor that it said will cut
the cost of manufacturing cellphones, fiber optics and other electronics.
Analysts heralded the new chip as a breakthrough because it will enable
relatively inexpensive semiconductors to process high speeds. Previously,
products that demanded fast semiconductors had to use a lot of expensive
materials. The new chips will also allow one chip to handle more functions.
"It will reduce the number of parts in a handset," said Richard Cunningham, a
senior analyst at research firm Cahners In-Stat Group. "There could be
substantial cost savings."
Motorola could certainly use a blockbuster chip. The company's
semiconductor division -- which accounts for 17% of the company's overall
revenue -- has had declining sales for the past three quarters amid a downturn
in the entire chip market. Analysts and investors are losing patience and have
been urging the company to sell -- or at least shrink -- the unit. In the most
recent quarter, Motorola's semiconductor sales dropped 38% and orders were
sliced in half.
Motorola's new chip is a combination of two materials: silicon, the inexpensive
material used most commonly to produce semiconductors, and gallium
arsenide, a much more expensive and temperamental material that is used to
transmit much higher speeds. Gallium arsenide chips are currently used in
cellphones, fiber optics, medical lasers and DVD players. A six-inch gallium
arsenide wafer costs about $400, while an eight-inch silicon wafer costs only
between $25 and $40. By combining the two materials, scientists only have to
use a small bit of gallium arsenide to get high speeds. Motorola said it hasn't set
a price for its new chips.
Analysts said that scientists had been working for years to find ways to make
gallium arsenide more economical by combining it with silicon. But gallium
arsenide doesn't bond readily to silicon, and previous attempts ended in failure.
Motorola, which has been working on the new chip for about two years, was
able to make it work by adding a sponge-like layer that sits between the silicon
and the gallium arsenide. The company said the same system will work with
other fragile materials.
Consumers won't be able to buy products that contain the new chips,
however, for another two years. Motorola said it expects to see some
prototypes of products at the end of next year and that actual production will
take another year. Motorola said it expects to license the technology to other
companies, including its competitors in the semiconductor market.
Write to Andrea Petersen at andrea.petersen@wsj.com
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