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To: esl who wrote (9000)	11/11/1997 10:42:00 AM
From: Paul Dieterich	Respond to of 25960

Chip foundries encouraged to update to new tech photolith: FSA Fears Fab Shortage From Page One of Electronic News: November 10, 1997 Issue By Peter Brown San Jose, Calif.--The Fabless Semiconductor Association (FSA) will today make a major change at the helm. After three years, Robert Pepper, president and CEO of Level One Communications, is retiring as chairman of the FSA and being replaced by David Angel, chairman and CEO of Information Storage Devices (ISD). One of the first items of business for Mr. Angel will be encouraging foundry companies to continue to build facilities and centers that ensure there is enough capacity for the coming years. "I am concerned that there may have been an overreaction in the industry that there is excess in capacity," said Mr. Angel. "There was a period back when there was a terrible shortage of capacity. Actually that is when the FSA formed. Now there is a period in which people are claiming excess capacity. Much of what is being installed is for memory and we need to make sure there isn't a bad reaction and people stop building foundries in the world and we experience this capacity shortage again." According to San Jose, Calif.-based market research firm Dataquest, the fabless industry is out-pacing the overall semiconductor market in terms of overall growth. The fabless sector is projected to have a compound annual growth rate (CAGR) for the years 1996-2001 of 27.4 percent compared to 16.2 percent for the overall semiconductor industry. This translates into increasing market share in the semiconductor industry from 4.8 percent currently to 7.8 percent in 2001, Dataquest said. Along with capacity issues, Mr. Angel plans to deal with 0.25- and 0.18-micron capability issues, equity investing in foundry services and the question of where R&D investment should be placed to continue rolling out unique products. Mr. Angel added he is going to try to bring fabless companies who are not members of the FSA into the organization so fabless companies as a whole can have one distinct voice... ..."Some of the most innovative designs in semiconductors are coming from the fabless companies," says Tom Newsom, business development manager at Hewlett-Packard's semiconductor test division. He sees these companies pushing the technology rather than the big established ones. "I think that is a sound objective. Even fabless companies need investment of some sort and do need the backing from Wall Street," said Reuven Marko, director of worldwide marketing for pure-play foundry Tower Semiconductor. "If the FSA finds a way to strengthen that tie to Wall Street by providing quality information, I think that helps investors recommend to others what to do in regard to these fabless companies. It gives you a good idea about what the company does and where it is going." Mr. Marko said that change in the semiconductor industry is always welcome and that new blood can sometimes take an organization in a better direction than it might have been going. Mr. Marko added the FSA already has numerous ideas and relationships in the works for standards, communications between companies and intellectual property transfers and would like to see these issues continue during Mr. Angel's term. Still not everybody is happy with FSA. Meir Janai, director of business development for Chip Express, said there were some issues that the FSA has not addressed, including running a 0.25 micron test chip program. Even though Chip Express is not yet manufacturing devices utilizing 0.25 micron, it would like to see the issue discussed.