Sematech Searching for Mission in Global Semiconductor Market
Austin, Texas, Nov. 19 (Bloomberg) -- Sematech Inc. proclaims its mission on a billboard outside its research plant in Austin, Texas: ``Accelerating the semiconductor revolution.'
If it could only persuade its members.
In the past year, one founder, National Semiconductor Corp., left the group. Motorola Inc. and Compaq Computer Corp. have said they're quitting too.
``Sematech has alienated a lot of people,' said Dan Hutcheson, an analyst with VLSI Research, a semiconductor market research firm. ``A lot of the companies are complaining.'
U.S. companies including Intel Corp., Texas Instruments Inc. and Motorola formed Sematech in 1987 to cooperate on chip research and development. They aimed to reclaim American prowess in chipmaking from Japanese competitors such as NEC Corp. and Hitachi Ltd. that were pulling ahead in computer memory chips.
By 1996, the U.S. companies had succeeded. Personal computer demand expanded the market for all chipmakers, and the chip industry was more specialized. U.S. corporations began working more closely with overseas competitors to develop complementary products, reducing the ``us against them' mentality.
Intel, for example, began relying on Asian companies to make some of the chips packaged with its microprocessors into ``chipsets' sold to personal computer makers.
Global Focus
Sematech, too, began to adopt a global focus, even courting overseas competitors.
Taiwan Semiconductor Manufacturing Co., Hyundai Electronics Industries Co., Royal Philips Electronics NV's semiconductor division and Infineon Technologies AG, which was spun off from Siemens AG in April, became full members in June.
The recruitment effort rankled some of Sematech's charter members. Motorola, the world's No. 3 semiconductor maker, said it's concerned that Sematech will fail to meet the research needs of an expanded membership.
``We just don't think (Motorola's and Sematech's) missions are going to match up as successfully in the future as they have in the past,' said Scott Stevens, a spokesman for Motorola's chip factory in Austin.
Motorola's $10 million to $15 million in annual dues don't help, either, when the company last year cut $1 billion in expenses from its semiconductor unit and sold its low-cost chip business to financier David Bonderman's Texas Pacific Group.
Changing Times
When Sematech formed, U.S. companies such as Intel were in the midst of cutthroat pricing from Japanese competitors that almost forced the world's largest chipmaker to shut down.
U.S. companies and lawmakers feared Japan would use its lock on market for dynamic random access memory chips, the main memory chips in a PC, to drive competitors out of business by selling at or below production costs, a process known as ``dumping.' The government agreed to put $100 million a year into Sematech until 1996, when funding stopped.
Now, U.S. companies control 48 percent of the world's semiconductor market, Intel microprocessors run about 80 percent of the world's PCs and the chip industry is the third-best performing group in the Standard & Poor's 500 Index this year.
``Sematech really doesn't have a mission,' VLSI Research's Hutcheson said.
Mark Melliar-Smith, the group's chief executive, disagrees.
Sematech must adjust its gaze to research issues facing chipmakers worldwide, including new materials and changes in lithography, the imprinting of circuitry on silicon wafers.
``International membership brings a diversity and strength,' Melliar-Smith said. ``The consortium is still very much alive and well and thriving.'
Intel, the world's biggest chipmaker, concurs.
It credits Sematech with developing technology such as the 300-millimeter silicon wafer and the use of copper in chip designs. That kind of research can benefit all semiconductor companies, Intel spokesman Howard High said.
``We don't want to be pursuing a technology that's unique to us,' High said. ``If you're wrong, you're going to suffer and everyone else is going to do well.'
U.S. members including Advanced Micro Devices Inc., Hewlett- Packard Co., International Business Machines Corp., Lucent Technologies Inc., Conexant Systems Inc. and STMicroelectronics NV have indicated they're staying put, too.
Heading Out
Compaq, on the other hand, plans to leave at year's end. The Houston-based computer maker inherited its membership after acquiring Digital Equipment Corp. last year. Digital no longer manufacturers semiconductors.
National Semiconductor left last year for financial reasons. It was the first dropout since 1992, when Micron Technology Inc., LSI Logic Corp. and Harris Corp. withdrew because of differences over research strategies.
Melliar-Smith hopes to shore up the ranks with other companies, possibly from overseas, while keeping Motorola on board by addressing its concerns. Sematech's charter requires members to give two years notice if they plan to leave the group.
With semiconductor production on the verge of major changes, Sematech is needed more than ever, Melliar-Smith said. New materials such as copper and new techniques allowing even smaller circuitry are on the horizon.
Within seven to 10 years, the industry will redesign the heart of the transistor, Melliar-Smith said.
``If we don't manage these changes very well,' he said, ``the road map will slow down, and we will fall off the technology curve.'
Nov/19/1999 12:25
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