Although IDMs have traditionally treated foundries as back-up sources for capacity, many industry observers believe that IDMs are increasing their outsourcing, even at advanced process nodes, and adopting an “IDM-light” model as they face pressures of rising costs for next-generation facilities and technology developments.
Examples supporting a trend to outsourcing are easy to spot. LSI Logic, which outsourced only 25% of its production in the second quarter of 2003, expects to increase outsourcing to 60% of production in the future. Philips Semiconductors also aims to outsource 50% of chip production to Asian foundries within the next five years, up from 10% currently.
Texas Instruments, the world’s third largest semiconductor maker, was able to increase 2003 sales by 20% as a result of the success of its outsourcing strategy, said company CFO Kevin March in TI’s annual meeting in May. This year, TI outsourced 48% of its first-quarter 0.13-micron production to TSMC, UMC and China’s Semiconductor Manufacturing International Corporation (SMIC).
IDMs are also cooperating with foundry firms in next-generation technologies.
In 2002, TSMC signed a pact with Philips, Motorola, and STMicroelectronics for the combined development of 90nm to 65nm CMOS logic and e-DRAM technologies. In December last year, TSMC signed a separate agreement with Motorola to co-develop 65nm SOI (silicon-on-insulator) technology.
In addition, in 2003, UMC struck a pact with Advanced Micro Devices (AMD) and Infineon Technologies to co-develop 65- and 45nm processes.
In March 2004, Samsung Electronics announced that it will join Chartered Semiconductor Manufacturing, IBM Microelectronics and Infineon Technologies in the development of 65nm technology, extending to 45nm process.
Article edited by Zoran Pavlovski
