1st Silicon exec ready to spend $500M
By Will Wade
EE Times
(07/14/99, 3:24 p.m. EDT)
SAN FRANCISCO — Claudio Loddo could be the most popular guy at this year's Semicon West. As chief executive of 1st Silicon (Malaysia) Sdn Berhad, a Borneo-based pure-play foundry that is to turn out its first wafers next year, Loddo has been wandering the halls of the equipment industry's largest trade show, checkbook in hand and ready to buy.
"We plan to spend about $500 million on equipment before we open," Loddo said. "We'll be spending more as we get closer to opening, but we're ready to place orders now. I'll spend at least $500,000 before the end of the year." And after last year's disastrous sales results in the slumping chip-gear business, anyone who expects to actually place an order is every equipment guy's best friend.
Loddo's project is currently a half-built shell, but he said it will become a watertight building by the end of the year, and he will spend next year filling it with high-tech semiconductor manufacturing equipment and testing the process. He expects 1st Silicon to ramp into full production with 0.25-micron technology by the end of 2000.
That's not bad, since a year ago the site was a 97-acre swath of jungle and reclaimed land on the less-than-highly-developed island of Borneo. In a region known mainly for timber exports, orangutan and barely-reformed headhunters, Loddo wants to open a state-of-the-art fab. So far, he's succeeded in attracting 42 core technical employees, with semiconductor experience ranging from one year to more than two decades.
"It's a quality-of-life decision," he said. While young Westerners may not want to relocate to the jungle, Loddo said he's been very successful in recruiting mid-career executives who want to live the easy life. "Some people are more attracted to living here than in Singapore, but if they miss the city, it's just an hour's flight to Singapore or Kuala Lumpur. It's a choice you have to make."
The fab is located just a few minutes outside Kuching, a city in the Malaysian state of Sarawak, which, along with the neighboring state of Sabah take up the northern third of Borneo. The two are often referred to as East Malaysia, in contrast with the more-developed Malaysian mainland on the nearby Malay peninsula. The Malaysian government, after more than three decades as a force in back-end assembly, is making a play to increase its presence in front-end chip production as well. Besides 1st Silicon, the country is also promoting a second fab project on the mainland, called Silterra, which is on a similar schedule but is about six months behind the Kuching project.
Kuching is an interesting mix of old and new, with a few modern hotels springing up to support growing commercial interests. Only a few miles outside of town are traditional longhouses, home to a tribal lifestyle that has changed little over the past few centuries.
Allen Sangco, executive support officer and a native of California, says he lives in the most expensive, most exclusive housing area in Kuching, where he rents a luxury apartment for just $500 a month. For another $100 per month, he has complete maid service, including laundry and cooking. "It's almost like living a colonial lifestyle," he said. "I could never live like this in the United States."
While 1st Silicon will begin operating next year with 0.25-micron technology, it will eventually shift to 0.18-micron and then 0.13-micron technology. Loddo said the fab will also adopt copper-interconnect technology at some point. While conceding that 1st Silicon is far behind foundry leaders UMC Group and Taiwan Semiconductor Manufacturing Co. Ltd., he said there will still be plenty of demand for his services.
"We will be ramping at the exact right time," Loddo said. "All the market reports I have seen are predicting a capacity crunch next year, so there will be plenty of people who will need us. I've heard that some Taiwanese fabless companies now can't get their orders filled with the big Taiwanese foundries, so we should have plenty of business."
The foundry has also struck a technology-transfer agreement with Sharp Corp., and will implement that company's manufacturing process. Sharp has also signed to be 1st Silicon's first customer, and Loddo said the Japanese company will utilize more than 20 percent of the fab's total capacity. Besides fabless companies, he also expects a growing trend of major chip companies shifting some production from their own fabs to pure-play foundries. "I recently heard of one foundry that had to turn down an order from a major chip company to deliver 15,000 wafers per month," he said. "There will be plenty of business for us when we are ready."
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