Michel Mayer, the CEO of Freescale Semiconductor Inc., had some interesting things to say about the company’s manufacturing strategy during Thursday evening’s conference call with analysts.
Freescale was purchased by a private equity group -- the $17.6 billion deal was finalized in December – so it was somewhat surprising that Freescale’s management continues to report quarterly financials, talk to analysts, and carry on almost as if it were still a publicly held company. The operative word is “almost” because there were a couple of times during the conference call when Mayer noted that while the company wants to be “transparent” to its bondholders and publicize its activities, he also wants to “limit strategic information that being a private company allows us to do.”
One analyst asked if Freescale would leave the Crolles II fab -- Freescale announced in January that it would leave the Crolles II process development alliance, but that negotiations continue with STMicroelectronics about the Crolles fab. Mayer noted that Freescale is using Crolles II for 90-nm manufacturing, and that 65-nm production is ramping there now.
However, he did shy away from directly answering whether Freescale would depart from Crolles, noting that negotiations continue with STMicro. One analyst asked if Freescale owns tools at Crolles that it could sell (Wall Street analysts must be counting every penny of assets these days) and Mayer cheerfully replied that yes, Freescale owns equipment at Crolles that it could gain from were it to leave the fab.
Mayer told analysts that joining the Fishkill alliance does not mean that its manufacturing strategy will change altogether. The company continues to operate fabs and own much of its manufacturing internally, and he mentioned that its relationships with TSMC, UMC, and Chartered remain intact. He said that Freescale will not use IBM for manufacturing because “our cost objectives are a little more aggressive” than IBM’s.
Mayer said Freescale would benefit from having its high performance, SOI process co-developed within the Fishkill alliance, where AMD and IBM both use SOI. Because IBM and AMD go into SOI wafer manufacturing somewhat earlier than Freescale does for its networking silicon, Freescale’s yields will benefit from being a fast follower rather than the SOI front runner at Crolles.
He decried Freescale’s current yields, saying they are “less than world class,” adding that gives management an opportunity to improve, and wring costs out of manufacturing. Ditto for supply management.
And he said Freescale will be a leader within the Fishkill alliance on a low-power CMOS research effort.
“At a high level it is fair to say that Fishkill will be a more effective model going forward for R&D. In a large alliance the effort is shared among more partners,” Mayer said.
In a dig at rival Texas Instruments, he said TI’s recent announcement that it would rely on a foundry partner for its 32-nm transistor development and beyond is an acknowledgement that “TI doesn’t have a need for high performance."
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.