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In major shift, Texas Instruments to licence digital CMOS technology from unnamed foundry partner

Posted on: 22-Jan-2007

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The company where the integrated circuit was co-invented will move process technology development to Asia. In a major strategic shift, Texas Instruments Inc. (Dallas) announced Monday (Jan. 22nd) that it will license its core digital CMOS process technology from an unnamed foundry partner, starting at the 32-nm node.
A TI spokesman said the company will lay off about 250 of the 640 people employed at the Silicon Technology Development (SITD) center in Dallas. The company expects an annual savings of about $200 million from the move.
The spokesman said he did not know which foundry will take over process development. Last year, TI added Chartered Semiconductor Co., Ltd. as a new foundry partner for 65-nm production, in addition to Taiwan’s two major foundries, TSMC and UMC. Chartered co-develops its digital CMOS technology at East Fishkill, N.Y. with AMD, IBM, Infineon, Toshiba, Samsung, and Sony.
The decision was surprising, even shocking, given TI’s long history of quickly moving to advanced process nodes with its self-developed digital transistor technology. There were recent signs, however, that TI was relying more heavily on foundries for production, saving depreciation costs and easing the financial burden in the cyclical chip industry. At the 90-nm node, TI had shifted to a majority of foundry-based manufacturing, approaching 70 percent at times. At the 65-nm node, the initial cellphone chipsets provided to handset maker Nokia have been made at UMC, according to an analysis by Chipworks, the Canadian technology analysis firm.
Nevertheless, TI was noted for its continuing emphasis on process development and transistor technology, led by senior vice president Hans Stork. And the company has actively supported research at both Sematech in Austin, Texas and at the IMEC consortium in Leuven, Belgium.
The spokesman said TI’s management concluded that in recent process development cycles “we ended up arriving at the same place at the same time” as the foundry partners. By licensing the technology the company will save time and money, he said, adding that “it’s a big shift in strategy, but it’s the right thing to do, long term, because it will make us more efficient.”
TI continues to develop its 45-nm process at its DMOS 6 facility in Dallas. “The 32-nm process is the first one that, from the very beginning, we will license from a foundry. It is an indication of how far the foundries have come,” the spokesman said.
The company will continue to work on analog-related process technology, as well as packaging-related technology, he added.
TI also announced that equipment at the 200-mm Kilby fab will be moved out to TI’s existing analog fabs, resulting in about 250 job reductions. TI shifted transistor development from the Kilby fab to the 300-mm DMOS 6 fab for the 65-nm and 45-nm process generations.
TI’s decision comes as fourth-quarter semiconductor revenues were weaker than expected. The company reported “a broad-based decline in company semiconductor product revenue of 5 percent for the fourth quarter,” compared with the previous quarter. (see the WeSRCH press release section for the quarterly earnings statement).
Revenues for the company as a whole were up about 14 percent year-on-year, to more than $14 billion, largely due to improved analog chip sales.
The shift to a licensed foundry technology indicates how the center of gravity is shifting to design, the spokesman said. At a panel discussion on 32-nm scaling challenges, organized by Applied Materials during the International Electron Devices Meeting, TI vice president Venu Menon said “the fulcrum of innovation is moving to design.”
As part of the earnings announcement, TI CEO Rich Templeton said “entering 2007, we challenge ourselves to keep improving performance. One way we’ll do this is by changing the way we develop advanced digital process technology. Instead of separately creating our own core technology, we will work collaboratively with our foundry partners to specify and drive the next generations of digital process technology, and we will continue making products on these technologies in our world-class factories. This is a natural extension of our existing relationships with foundries that will increase our R&D efficiency and our capital efficiency while maintaining our responsiveness to customers.”  
TI’s decision narrows the club of U.S.-based semiconductor companies with internally developed CMOS processes to AMD and its process development partner IBM, Intel, and Freescale Semiconductor with its partners based at the Crolles, France technology consortium.
The TI spokesman also said TI has yet to make a decision on equipping its Richardson, Texas fab. The shell for the R Fab was completed last year. The company is now considering plans for equipping the empty fab for 45-nm production. “We are looking at the timing question now, but there is no date set yet.”

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About weQuest:
weQuest's are written by G Dan Hutcheson, his career spans more than thirty years, in which he became a well-known as a visionary for helping companies make businesses out of technology. This includes hundreds of successful programs involving product development, positioning, and launch in Semiconductor, Technology, Medicine, Energy, Business, High Tech, Enviorntment, Electronics, healthcare and Business devisions.

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