Malay foundry gambles on growth forecasts
By Mark Carroll
EE Times
(12/21/00 16:45 p.m. EST)
KUCHING, Malaysia -- Bringing high tech to a Borneo outback better known for logging than logging on, a dedicated foundry plans to mass-produce quarter-micron devices on 8-inch lines by early next year.
1st Silicon Sdn. Bhd. (1Si) is one of two Malaysian foundries ramping up the 0.25-micron lines. But while the second fab, Silterra Malaysia Sdn. Bhd., sits in an established technology enclave in Kulim in the north of Malaysia, 1Si's lines are in Sarawak, an hour's flight from Penang's packaging facilities.
Gearing up to complete with the likes of TSMC, UMC and CharteredSemiconductor, 1Si completed qualification of wafers and processes this month while Silterra reported its first functional silicon.
With 1Si's Sarawak setting--a new location for a semiconductor plant--the big boys give the venture little chance to succeed, suggesting its remoteness will deny the foundry both the supplies and engineering talent it needs.
Nevertheless, 1Si chief executive Claudio Loddo is banking on market forecasts like Dataquest's, which estimated a 25 percent compound annual growth rate for foundry services from 1999 to 2004, to build himself a niche market. "Foundry capacity is expected to be in tight supply through 2002," said Loddo. "If this holds true, it gives us a chance to get a foothold."
1Si is often portrayed as an oasis of technology in the Southeast Asian jungle. Although Malaysia's electronics exports, at $90 billion per year, represent 66% of the country's total, Sarawak still depends largely on timber as an export product.
But the seven-year-old Sarna Jaya Free Industrial Zone in which 1Si is located is comparable in terms of infrastructure to almost any in Asia - and in some cases it fares even better.
Water is plentiful, as is hydroelectric power. An international airport is 20 minutes away, and the roads are wide and underused. Flying time to the hundreds of packaging facilities in Penang, Malaysia, is about one hour. And 1Si has a contract with Praxair Inc. for in-park chemical and gas production.
Still, many in the foundry industry, like TSMC's Morris Chang, dismiss 1Si as too little, too late. "The success of Taiwan's fabs lies in the close proximity of all the necessary process gases and chemicals, and other supporting infrastructure components needed by a modern fab," said Chang, chairman of TSMC.
Others doubt 1Si's ability to attract the necessary engineering talent to a place that few people could pinpoint without an atlas. (Kuching is on the northwest side of the island of Borneo.) "With today's tight market for top process engineers, it will be difficult for 1Si to attract the necessary talent," said Peter Chang, chief executive of UMC.
Not so, said Loddo. 1Si may not have many, if any, Taiwanese fab engineers, but it does have an assortment of engineers from other countries with extensive fab experience. "Many of our engineers are from Korea," said Loddo. "We also have Japanese, Singaporean and Chinese engineers.
"One of the main reasons we have been able to attract engineers here from these countries is that we offer them what they can't get in their own country: profit sharing and stock options. We also offer competitive salaries but in a location with a much lower cost of living that does not sacrifice, and in many ways is better than, the quality of life in their home countries," he added.
The fab that will open in the beginning of 2001 has a 90,000-square-meter clean room that can process 30,000 wafers per month. 1Si's fab 2 will be in a separate location across from the fab 1 facility. It will use 0.18-micron technology with 8-inch wafers. Construction is set to begin in the second quarter of 2001.
Loddo said 1Si's fab 3 will be built as market conditions dictate. The process technology and wafer size to be used in fab 3 will also be determined by a forecast of market conditions in 2003 to 2005.
For its part, Silterra has come under less fire, since its Kulim location is part of a more established high-tech outcropping not far from the island of Penang, home to much of Malaysia's electronics industry.
Silterra's process technologies--which was obtained from LSI Logic Corp. as part of a major alliance--offers up to six layers of metal at CMOS design rules including 0.25-micron, 0.22-micron and 0.18-micron. A mixed-signal module will also be available for the CMOS18 (0.18-micron) process. Like 1Si, the company expects to ramp up to 30,000 wafers/month by 2002.
1Si's technology is not cutting-edge but is aimed at the majority of ICs now being produced. Sharp Electronics Corp. is its main partner in transferring the 0.25-micron process technology.
Its CMOS logic process typically is geared to a 1-polysilicon, 5-metal-layer chip. Both 2.5 and 3.3 voltages can be accommodated with the I/O transistor running at 3.3 V and the logic core running at 2.5 V.
The CMOS mixed-signal 0.25-micron process uses a double-poly capacitor. It has two poly and five metal layers. Like the logic process, the core transistor voltage is 2.5 V. The I/O voltage is 3.3 V.
In addition to being 1Si's main technology partner, Sharp is also its largest customer. Sharp has committed to $300 million worth of wafers over the next few years. Loddo said several United States customers have also committed, and he says he spends much of his time talking with them and lining up new customers.
Sharp is also providing technology training for 1Si engineers. Over 150 1Si engineers have been trained at Sharp fabs worldwide. Sharp engineers also participated in equipment installation and will remain at 1Si during the ramp.
Financing for 1Si is a mixture of debt and equity. 1Si has commitments for $1.2 billion in financing with another $500 million in current negotiation. Debt is to be about $943 million from sources in Germany, Japan and the United States. Equity is about $757 million, of which $93 million will be from suppliers and customers.
Loddo said he wants to stress customer service so the company can establish a loyal customer base. He's targeting small design houses bumped by the big foundries now that the business cycle is up, and he's hoping they will stay with 1Si when the market slumps. |
