Section 2 Worldwide IC Vendors

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2 WORLDWIDE IC VENDORS

OVERVIEW

Figure 2-1 provides a breakdown of worldwide IC sales by North American, Japanese, European, and Rest-of-World (ROW) companies for 1975-1996. As can be seen, sales by North American companies were overwhelmingly dominant in the mid-1970Õs. However, by the mid-1980Õs the majority of the worldÕs IC sales were about evenly split between North American and Japanese companies. By 1990, the Japanese had increased their share of worldwide IC sales to 48 percent, but in 1992 JapanÕs economy weakened causing their share to begin falling. A persistent economic slump in the following years coupled with the KoreansÕ success in the MOS memory market caused the Japanese share to continue falling. The Japanese share fell further in 1996 primarily because of yen to dollar exchange rate and the decline in the DRAM market.

70% 70 63% 60

50 48% 46% 46% 43% 42% 40 36% 36% Percent 32% 30 27%

20 18% 15%* 13%* 10% 9% 10% 9% 10 8% 6% 7%

2% 2% 2% 2%

0 1975 1980 1985 1990 1995 1996 (EST)

Year

= North American Companies = European Companies = Japanese Companies = ROW Companies * Korean companies' share was 11 percent in 1995 and 9 percent in 1996.

Source: ICE, "Status 1997" 13743T

Figure 2-1. Marketshares of Worldwide IC Sales ($)

INTEGRATED CIRCUIT ENGINEERING CORPORATION 2-1 Worldwide IC Vendors

For the past 21 years European companies have continued to represent between seven and ten percent of worldwide IC sales. Meanwhile, the share of the ROW companies (primarily Korean and Taiwanese) surpassed that of the European companies in 1992, reaching 15 percent in 1995. However, the decrease in DRAM pricing caused the ROW share to decline two percentage points in 1996.

A ranking for the worldÕs top ten merchant semiconductor sales leaders in 1996 is given in Figure 2-2. The sales for these companies as a group decreased seven percent during the year. Together, they held roughly 59 percent of the overall semiconductor market. The most notable thing about this chart is that most of the companies that showed a decrease in semiconductor sales for 1996 are heavily involved in DRAMs. Another interesting note is that SGS-Thomson entered the top ten semiconductor rankings for the first time. The 1996 top fifteen worldwide integrated circuit sales leaders are listed in Figure 2-3.

1996 DRAM Share 1996 Total 1996 IC 1996/1995 Rank Discrete of 1995 Company Semi Sales Sales Percent Sales Semiconductor ($M, EST) ($M, EST) Change 1996 1995 1992 ($M, EST) Sales 1 1 3 Intel 17,800 17,800 — 31 — 2 2 1 NEC 10,250 9,200 1,050 Ð16 39 3 3 2 Toshiba 8,725 6,970 1,755 Ð18 35 4 4 5 Hitachi 8,350 7,090 1,260 Ð15 45 5 5 4 Motorola 8,025 6,525 1,500 Ð7 8 6 7 6 TI 6,750 6,700 50 Ð14 41 7 6 11 Samsung 6,050 5,800 250 Ð28 77 8 8 N/A IBM Microelectronics 5,100 5,100 — Ð11 35 9 9 8 Mitsubishi 4,300 3,550 750 Ð15 44 10 14 14 SGS-Thomson 4,200 3,590 610 18 — — — — Total 79,550 72,325 7,225 Ð7 —

Source: ICE, "Status 1997" 18072M

Figure 2-2. Worldwide Top Ten Merchant Semiconductor Sales Leaders

NORTH AMERICAN MERCHANT IC VENDORS

Provided in Figure 2-4 is a listing of those North American merchant IC vendors with sales of at least $50 million in 1996. The figure includes sales for both IC manufacturers and fabless IC suppliers. For the manufacturers, IC ÒsalesÓ include all revenue from ICs produced by their own fabrication facilities and by external foundries. Also, sales by the major ASIC firms (e.g., Xilinx, Altera, and LSI Logic) include revenue from sales of software design tools. On average, sales for IC vendors headquartered in North America grew four percent in 1996 compared to 33 percent in 1995.

2-2 INTEGRATED CIRCUIT ENGINEERING CORPORATION Worldwide IC Vendors

Rank 1996 Total 1996/1995 Company IC Sales Percent 1996 1995 1992 ($M) Change

1 1 2 Intel 17,800 31 2 2 1 NEC 9,200 Ð17 3 3 5 Hitachi 7,090 Ð18 4 4 3 Toshiba 6,970 Ð19 5 6 6 TI 6,700 Ð14 6 7 4 Motorola 6,525 Ð10 7 5 9 Samsung 5,800 Ð29 8 8 N/A IBM 5,100 Ð11 9 13 15 SGS-Thomson 3,590 21 10 9 8 Mitsubishi 3,550 Ð20 11 11 7 Fujitsu 3,225 Ð20 12 14 13 Philips 3,215 10 13 10 27 Hyundai 3,150 Ð28 14 18 20 Siemens 2,400 1 15 12 21 LG Semicon 2,400 Ð33 — — — Total 86,715 Ð9

Source: ICE, "Status 1997" 20458B

Figure 2-3. Worldwide Top Fifteen Merchant IC Sales Leaders

Those companies with the strongest sales gains (in percent) for the year are shown in Figure 2-5. Note that the list includes only those companies with sales of more than $100 million thereby making the growth rates more comparable. A close look at the figure reveals two interesting points. First, most of the companies listed in the figure are involved in graphics/multimedia- related ICs, DSPs, and/or communications ICs; and second, nearly two-thirds of them are fabless.

Figure 2-6 lists selected North American IC companies and the end-user markets they rely on. Those companies that sell to a balance of computer, communications, and consumer product manufacturers are generally more resilient to cyclical fluctuations. Those companies that are heavily dependent on the computer industry have benefited from a booming market for PCs over the past couple of years. At the same time, however, these same companies were very susceptible to hard times during the PC inventory correction period in the first part of 1996.

A good example is Cirrus Logic, who in FY96 (ended March 1996) experienced its first annual net loss since its initial public offering in June 1989 (Figure 2-7). Due to the companyÕs reliance on the PC market, it dropped out of the North American top ten ranking for 1996. Only about 20 percent of the companyÕs revenues come from sources outside the PC market. Cirrus set a goal to increase that portion to 40 percent by the end of the decade.

INTEGRATED CIRCUIT ENGINEERING CORPORATION 2-3 Worldwide IC Vendors

1995 1996/1995 1996 (EST) Company Fabless1 MOS Bipolar IC Total Percent Change MOS Bipolar IC Total 8x8 x 50 — 50 10 55 — 55 Actel x 109 — 109 38 150 — 150 Allegro MicroSystems2 45 136 181 13 51 153 204 Alliance Semiconductor x 222 — 222 Ð72 63 — 63 Altera x 402 — 402 22 492 — 492 AMCC2 14 37 51 18 16 44 60 AMD 2,315 115 2,430 Ð20 1,880 75 1,955 AMI 221 — 221 2 225 — 225 Anadigics3 51 — 51 27 65 — 65 Analog Devices2 485 442 927 33 665 565 1,230 Atmel2 634 — 634 69 1,070 — 1,070 Burr-Brown2 60 168 228 1 67 163 230 C-Cube Microsystems x 125 — 125 152 315 — 315 Catalyst x 57 — 57 14 65 — 65 Cherry Semiconductor2 3 96 99 1 6 94 100 Chips and Technologies x 137 — 137 24 170 — 170 Cirrus Logic2,3 1,187 — 1,187 Ð18 975 — 975 Cypress2 596 — 596 Ð10 535 — 535 Cyrix x 228 — 228 Ð34 150 — 150 Dallas Semiconductor 233 — 233 21 282 — 282 ESS Technology x 106 — 106 42 150 — 150 Exar2 x 103 35 138 Ð20 85 25 110 Gennum — 42 42 19 — 50 50 Harris2 435 90 525 — 435 90 525 Honeywell 52 6 58 3 52 8 60 IBM Microelectronics2 4,815 890 5,705 Ð11 4,300 800 5,100 IC Works2 43 — 43 16 50 — 50 ICS x 117 — 117 Ð23 90 — 90 IDT2 689 — 689 Ð21 545 — 545 IMP 70 — 70 17 82 — 82 Intel2 13,590 — 13,590 31 17,800 — 17,800 ISSI x 149 — 149 Ð23 114 — 114 Lattice x 185 — 185 8 200 — 200 Level One x 78 — 78 41 110 — 110 Linear Technology2 98 230 328 16 130 250 380 LSI Logic 1,268 — 1,268 1 1,280 — 1,280 1 A company is considered fabless if the majority of its wafers are manufactured by independent foundries. 2 BiCMOS ICs included under MOS. 3 GaAs ICs included under MOS.

Source: ICE, "Status 1997" 9998AA

Figure 2-4. North American CompaniesÕ IC Sales (³$50M, $M)

2-4 INTEGRATED CIRCUIT ENGINEERING CORPORATION Worldwide IC Vendors

1995 1996/1995 1996 (EST) Company Fabless1 MOS Bipolar IC TotalPercent Change MOS Bipolar IC Total Lucent Technologies2 1,450 230 1,680 25 1,840 260 2,100 Maxim2 345 — 345 23 425 — 425 Micrel2 47 6 53 26 60 7 67 Micro Linear2 x 18 39 57 Ð7 21 32 53 Microchip Technology 273 — 273 14 310 — 310 Micron 2,705 — 2,705 Ð36 1,740 — 1,740 Mitel Semiconductor 68 — 68 3 70 — 70 Motorola2 5,797 1,455 7,252 Ð10 5,225 1,300 6,525 National2 1,164 1,140 2,304 Ð2 1,110 1,150 2,260 Oak Technology x 212 — 212 Ð31 146 — 146 OPTi x 164 — 164 Ð27 120 — 120 Orbit Semiconductor 62 — 62 21 75 — 75 QLogic x 50 — 50 26 63 — 63 Raytheon Semiconductor2,3 37 65 102 Ð2 50 50 100 Rockwell Semiconductor3,4 760 — 760 97 1,500 — 1,500 S-MOS Systems x 190 — 190 Ð5 180 — 180 S3 x 316 — 316 42 450 — 450 Sierra Semiconductor x 189 — 189 Ð1 187 — 187 Silicon Storage Technology x 38 — 38 150 95 — 95 Silicon Systems2, 5 205 170 375 Ð47 125 75 200 Standard Microsystems 142 — 142 37 195 — 195 Symbios Logic 520 — 520 11 575 — 575 Texas Instruments2,3 5,995 1,805 7,800 Ð14 4,900 1,800 6,700 Trident Microsystems x 139 — 139 29 180 — 180 TriQuint3 46 — 46 26 58 — 58 Unitrode2 10 106 116 12 16 114 130 Vitesse3 47 — 47 53 72 — 72 VLSI Technology 720 — 720 — 720 — 720 VTC — 166 166 5 — 175 175 Xicor 114 — 114 12 128 — 128 Xilinx x 520 — 520 9 565 — 565 Zilog 265 — 265 13 300 — 300 Others 1,525 125 1,650 Ð9 1,400 100 1,500 Total 53,105 7,594 60,699 4 55,621 7,380 63,001 1 A company is considered fabless if the majority of its wafers are manufactured by independent foundries. 2 BiCMOS ICs included under MOS. 3 GaAs ICs included under MOS. 4 Includes Brooktree 1996 sales. 5 Acquired by TI, figure represents only 1H96 sales. Source: ICE, "Status 1997" 9998AA

Figure 2-4. North American CompaniesÕ IC Sales (³$50M, $M, continued)

INTEGRATED CIRCUIT ENGINEERING CORPORATION 2-5 Worldwide IC Vendors

1996 Percent Rank Company Primary Products Growth

1 C-Cube Microsystems 152 Digital video and still image compression chips.

2 Rockwell 97 Modem chips, multimedia and graphics devices, and communications circuits.

3 Atmel 69 Programmable non-volatile memory and logic chips, as well as gate arrays and cell-based ASICs.

4 S3 42 Graphics and video accelerator ICs.

ESS Technology 42 Audio ICs, wavetable synthesizers, and multimedia system chipsets.

5 Level One 41 ICs for telecommunications and data communications equipment.

6 Actel 38 Antifuse-based FPGAs.

7 SMC 37 PC I/O and systems logic circuits, networking controllers, and foundry services.

8 Analog Devices 33 Standard and high-performance linear ICs, DSPs, and mixed- signal ICs.

9 Intel 31 MPUs and flash memory.

10 Trident Microsystems 29 Graphics and multimedia-related devices.

11 Lucent Technologies 25 DSPs, standard cell ASICs, telecommunications ICs, and FPGAs.

* With sales of at least $100M in 1996. Source: ICE, "Status 1997" 13727T

Figure 2-5. Top North American IC Sales Growth Companies*

Top Ten North American Fabless IC Suppliers

Figure 2-8 provides a ranking of the top ten North American fabless IC suppliers. With few exceptions, the leading fabless firms increased their sales in 1996. As a group, sales for the ten companies increased 25 percent in 1996.

Fabless IC companies are generally focused on one or maybe two IC product types. Therefore, their sales are dependent on the condition of the markets for those particular products. As a result, company positions within the top ten fabless rankings can change dramatically from year to year. For example, high demand for C-Cube MicrosystemsÕ digital video and still image compression products allowed it to enter the rankings at number four, while Cyrix dropped out of the top ten ranking because of the difficulty in breaking IntelÕs grip on the MPU market.

Top Ten North American Merchant IC Manufacturers

The top ten North American IC manufacturers of 1996 are listed in Figure 2-9. As seen, only a few of the top ten companies showed growth in their sales of integrated circuits, and collectively, their sales are estimated to have grown only three percent for the year, which comes after 33 percent growth in 1995.

2-6 INTEGRATED CIRCUIT ENGINEERING CORPORATION Worldwide IC Vendors

Computers, Communications Consumer Other Markets Peripherals Altera Atmel Cirrus Logic Cypress Dallas Semiconductor Exar IDT Intel Linear Technology Maxim Microchip Technology Motorola Silicon Systems Trident Microsystems TriQuint Semiconductor Vitesse Semiconductor Xilinx Zilog

>75% of sales >50% of sales >25% of sales >10% of sales <10% of sales

Source: ICE, "Status 1997" 18957C

Figure 2-6. North American IC CompaniesÕ End-Market Reliance

FY96 FY95 FY94 FY93 FY92 FY91 FY90 FY89 Net Sales 1,147 889 557 356 218 178 107 49 Net (Loss) Income (36) 61 45 20 16 19 14 (2)

Source: ICE, "Status 1997" 21207

Figure 2-7. Cirrus LogicÕs Financial History ($M, Fiscal Year Ends in March)

Since becoming the largest North American IC company in 1990, Intel has continued to widen the gap between it and second place to over $11 billion in 1996. Intel has been very successful in pro- moting its Pentium CISC microprocessor through aggressive pricing and marketing strategies. The company is also the leading flash memory supplier.

After losing momentum in the early 1990Õs, Texas Instruments had two record-setting years in a row, allowing it to capture the number two spot from Motorola in 1995. Its IC business grew 36 percent in 1994 and 24 percent in 1995. Much of the companyÕs strategic emphasis in semiconductors is on digital signal processors, and as a result, its DSP sales have grown substantially

INTEGRATED CIRCUIT ENGINEERING CORPORATION 2-7 Worldwide IC Vendors

faster than the DSP market in the past couple of years. TI has seen strong demand for its mixed- signal/analog ICs and application-specific devices. Unfortunately, in 1996, the companyÕs IC sales decreased 14 percent, primarily due to the decline in DRAM prices.

1996/1995 1996 1996 Company 1995 Percent Rank (EST) Change

1 Xilinx 520 565 9 2 Altera 402 492 22 3 S3 316 450 42 4 C-Cube Microsystems 125 315 152 5 Lattice 185 200 8 6 Sierra Semiconductor 189 187 Ð1 7 S-MOS Systems 190 180 Ð5 7 Trident Microsystems 139 180 29 8 Chips & Technologies 137 170 24 9 Actel 109 150 38 2,312 2,889 25 * A company is considered fabless if the majority of its wafers are manufactured by independent foundries. Source: ICE, "Status 1997" 20456B

Figure 2-8. 1996 Top Ten North American Fabless* IC Suppliers ($M)

1996/1995 1996 1996 Company 1995 Percent Rank (EST) Change

1 Intel 13,590 17,800 31 2 Texas Instruments 7,800 6,700 Ð14 3 Motorola 7,252 6,525 Ð10 4 IBM Microelectronics 5,705 5,100 Ð11 5 National Semiconductor 2,304 2,260 Ð2 6 Lucent Technologies 1,680 2,100 25 7 Advanced Micro Devices 2,430 1,955 Ð20 8 Micron Technology 2,705 1,740 Ð36 9 Rockwell 760 1,500 97 10 LSI Logic 1,268 1,280 1 Total 45,494 46,960 3

Source: ICE, "Status 1997" 20457B

Figure 2-9. 1996 Top Ten North American IC Manufacturers ($M)

2-8 INTEGRATED CIRCUIT ENGINEERING CORPORATION Worldwide IC Vendors

1995 marked the first year that ICE classified IBM Microelectronics as a merchant IC company (i.e., more than about 25 percent of its total IC production is sold on the open market). As a result, the company is now the fourth largest merchant IC manufacturer in North America. The company hopes to achieve a 50/50 external/internal IC sales level in 1997.

The strongest products for Lucent Technologies in 1996 were standard cell ASICs, DSPs, and FPGAs. Meanwhile, Rockwell continues to see very high demand for its modem chips and chipsets. In addition, RockwellÕs acquisition of Brooktree helped it become one of the top ten North American IC manufacturers for 1996.

Like fabless Cyrix, AMD had a difficult time competing against Intel in the microprocessor market. The company is pinning its hopes on its sixth-generation AMD-K6 microprocessor, which is expected to enter volume production in the first quarter of 1997. Demand for AMDÕs flash memory and network communications ICs has remained high.

To free itself from the volatile DRAM product cycle, Micron is busy developing other products such as flash memories and radio frequency identification (RFID) chips. MicronÕs sales grew 72 in 1995, but declined 36 percent in 1996.

Provided below are selected announcements made by the top ten North American merchant IC manufacturers in 1996.

Top Ten North American IC Manufacturer Highlights

Intel Ñ Wafer Fab Announcements

¥ Announced its plans to build a $1.3 billion fab facility in Fort Worth, Texas. The facility, to be called Fab 16, is expected to have a 75,000 square foot Class 1 cleanroom. Initial production will begin with microprocessors on 200mm wafers, using a 0.25µm process. Future plans include a move to a 0.18µm process and 300mm wafers. Construction is set to begin mid-1997 with production starting in 1999.

¥ Began construction of a new $1.5 billion fab facility at its Leixlip, Ireland, site. Fab 14 will produce advanced logic devices, including future generations of the Pentium Pro microprocessor. Scheduled for completion in 1998, the factory will run 200mm wafers using a 0.25µm process.

¥ Sold its Livermore, California, Fab 3 facility to Seaway Semiconductor Inc., which is converting the facility into a foundry.

INTEGRATED CIRCUIT ENGINEERING CORPORATION 2-9 Worldwide IC Vendors

Intel Ñ Key Agreements

¥ Penned a patent cross-license and limited technology transfer agreement with Hyundai that covers all of HyundaiÕs IC patents and all but IntelÕs microprocessor patents.

¥ Teamed up with Lockheed Martin Corporation to jointly develop a real-time 3D graphics accelerator, to be introduced in the second half of 1997. The accelerator will use 3D technology from Lockheed Martin and 2D technology provided by Chips and Technologies. The chips will also be based on IntelÕs accelerator graphics port (AGP) technology.

¥ Licensed its 386 microprocessor technology to Acer Inc. of Taiwan, which will use the technology in gaming systems and consumer electronic products.

¥ Licensed flash-related patents to Integrated Silicon Solution Inc. (ISSI). The agreement does not include joint development of flash products.

¥ Signed a five-year patent cross-licensing agreement with AMD in early 1996 giving the two companies rights to use each otherÕs MPU-related patents and certain copyrightsÑexclud- ing microprocessor code. AMD agreed not to use Intel microcode beyond the 486 MPU generation.

Intel Ñ Product Briefs

¥ Expanded its SmartVoltage flash memory line with two families that offer fast programming with single-voltage flexibility at densities up to 16M. Produced in IntelÕs 0.4µm ETOX process, the 4M and 16M flashfile Smart3 and Smart5 devices will go into production in 1Q97. Also, Smart3 boot-block flash memories will be introduced in early 1997. Sharp, IntelÕs flash partner, will second-source 4M, 8M, and 16M Smart3 and Smart5 devices.

¥ Began moving its Pentium microprocessor into embedded applications by disclosing the timing specs and gathering support from third-party software vendors and board makers.

¥ Decided to discontinue further development of Pentium chipsets in 1997 in an effort to focus on the 440LX chipset which will support its upcoming single-chip version of its Pentium Pro, code-named Klamath. In early 1997, Intel will introduce its last Pentium chipset, the 430TX for the P55C.

2-10 INTEGRATED CIRCUIT ENGINEERING CORPORATION Worldwide IC Vendors

¥ Revealed its 200MHz version of its Pentium MPU in June 1996. The chip is based on a 0.35µm process and features a new package for Intel, the plastic pin grid array (PPGA), that Intel hopes will enable better thermal conduction and dispersion of heat. A copper/nickel heat slug is mounted on the PPGA for heat dissipation. The company does not plan to introduce anything beyond 200MHz during the remainder of the Pentium lifecycle.

¥ Announced in early 1996, it would scale back production of low density (256K and 512K) flash devices to make room for 1M, 2M, 4M, 8M, and 16M parts, which are more profitable and in higher demand.

¥ Introduced its ultra-low-power 486 microprocessor for MCU applications featuring on-board flash memory, power reduction features, and a 16-bit external data bus version ranging in speed from 16MHz to 33MHz.

¥ Introduced its multimedia extension (MMX) technology, which it plans to use throughout its line of Pentium and Pentium Pro microprocessors. The first device to utilize this technology will be the Pentium P55C. Intel plans to make all of its microprocessors multimedia-capable in 1997.

¥ Brought out an addition to its ubiquitous 8-bit MCS 51 microprocessor family. The 8xC151 replaces the 80C51Õs sequential instruction execution unit with a pipelined structure to enhance instruction execution times.

¥ Boosting its efforts to promote the universal serial bus (USB) as a standard. Intel announced it will sell USB chipsets and MCUs and plans to license the technology to other chip makers.

Texas Instruments Ñ Wafer Fab Announcements

¥ Announced that it would delay the expansion of its joint-venture fab facility with Acer Inc. in Taiwan due to the slowdown of the memory market. The expansion was originally expected to begin production in January of 1997, but was delayed until March of that same year.

¥ Building a $2 billion ÒmegafabÓ at its main campus in Dallas, Texas. The new facility, called DMOS 6, will have a 118,000 sq. ft. cleanroom and primarily focus on DSPs. A complete shell will initially be built, but equipment installation will be gradual. Initial capacity, with production expected to begin by the end of 1997, will start at 2,500 200mm wafers per week.

¥ Signed a joint-venture agreement with Alphatec Electronics to build a $1.2 billion fab facility in Thailand. The venture, called Alpha-TI Semiconductor Co. Ltd., is scheduled to begin production of 16M and 64M DRAMs in 2Q97, with a capacity of 5,000 200mm wafers per week.

INTEGRATED CIRCUIT ENGINEERING CORPORATION 2-11 Worldwide IC Vendors

Texas Instruments Ñ Key Agreements

¥ Established a venture partnership with South Korean based Anam Industrial Co. The alliance calls for Anam to invest $3 billion into a plant to be built in South Korea. TI will provide technical support during construction and supply the manufacturing technology for the fab in exchange for a guaranteed supply of its wafers. The fab will be used to manufacture advanced logic chips. Production is expected to begin in the first half of 1998.

¥ Signed a 10-year cross-licensing agreement with Samsung, ending years of litigation between the two companies. The agreement replaces a previous five-year licensing agreement that expired in December 1995.

¥ Purchased TDKÕs U.S. subsidiary Silicon Systems Inc. (SSI). SSI will operate as a wholly- owned subsidiary of TI and will retain its name and its headquarters in Tustin, California. Through the purchase, TI gains additional mixed-signal capabilities to leverage its DSP efforts in the mass-storage markets.

¥ Licensed the Permedia 3D graphics microprocessor core from 3Dlabs Inc., with plans to design, manufacture, and sell products based on the core. As part of the licensing agreement, TI purchased a minority equity stake in 3Dlabs and will manufacture Permedia chips that will be sold by 3Dlabs.

Texas Instruments Ñ Product Briefs

¥ Introduced a chipset based on the FLEX messaging technology it licensed from Motorola. The FLEX chipset will be added to its DSP portfolio and is targeted at the one-way data-messaging paging market.

¥ Introduced the first two of several planned DSP devices specifically designed for set-top box applications. The device integrates onto one chip the decryption, decode, and display functions previously performed with three separate chips. Sampling of both devices, which are based on a 32-bit ARM RISC processor, began in 4Q96.

¥ Unveiled a new single-chip DSP solution that integrates all the digital baseband functions necessary for the design of digital wireless telephones using any transmission standard in the world. The chip combines a TI DSP core with a low-power ARM RISC processor core.

¥ Introduced what it calls its Timeline Technology (Figure 2-10) for building ASICs with 0.18µm linewidths (Leff) and 125 million transistors on a chip. The Timeline Technology is slated to be in volume production in 1H97.

2-12 INTEGRATED CIRCUIT ENGINEERING CORPORATION Worldwide IC Vendors

Density: 20 million gates, 125 million transistors

Process: 0.25µm (0.18µm effective channel length) CMOS

Cores Available: DSPs, MCUs, ASIC logic, SRAM, Flash, and DRAM

Target Applications: Wireless telecom, workstations, audio/visual systems, and hard disk drives

Availability: Beta testing late 1996, volume production 1H97

Source: ICE, "Status 1997" 21043

Figure 2-10. TIÕs ÒTimelineÓ ASIC Technology

¥ Announced plans to apply its 0.18µm Timeline Technology to its networking products. Currently in the beta stage, TI expects to sample its first products in the later half of 1997 and begin volume production in 1998.

¥ Introduced a DSP-based controller targeted at the digital motor and motor control systems market. The device, TMC320C240, is the first in a planned series of devices optimized for motor control functionality. The controller features a 16-bit, 20 MIPS DSP core, 16K of ROM or flash, and 28-bit I/O capabilities. The device is expected to sample in 1Q97.

¥ Announced its new x32 synchronous DRAM (SDRAM) for graphics subsystems. The device is a 16M, 256Kx32-bit two-bank SDRAM designed as a replacement for its 8M synchronous graphics RAM (SGRAM). Volume production of the device is expected to begin in 4Q97.

¥ Plans to combine its customizable DSP core (CDSP) with Seagate TechnologyÕs hard disk drive to create a 3.5-inch hard disk drive (HDD) with uniprocessor DSP design. TIÕs CDSP uniprocessor combines logic, a DSP core, and flash memory into a single unit that will replace up to five devices commonly used in HDDs.

¥ Revealed details of its new ThunderSwitch architecture for a family of single-chip network switches that will support all major Ethernet standards. The ThunderSwitch architecture integrates media-access controllers and media-independent interfaces for multiple ports.

¥ Announced its advanced high speed CMOS (AHC/AHCT) logic family, which will be alternate-sourced by Philips Semiconductors. The initial devices include a range of gates, flip- flops, and bus-related functions, and are specified for 3.3V operation.

¥ Announced additions to its DSP product line that have flash memory embedded on-chip, giving DSP users a new reprogramming capability.

¥ Began sampling in late 1996, a 16-bit fixed-point programmable DSP offering 100MIPS performance. The chip is fabricated using TIÕs 0.25µm four-level-metal CMOS process.

INTEGRATED CIRCUIT ENGINEERING CORPORATION 2-13 Worldwide IC Vendors

¥ Added to its TCG Series of ASICs, the TCG400 series of gate arrays and the TEC4000 series of embedded arrays. The arrays are manufactured using a four-level-metal 0.35µm CMOS process and offer up to 1.7 million usable gates.

Texas Instruments Ñ Other Noteworthy News

¥ Plans to sell its defense electronics business in an effort to focus on its core businesses.

Motorola Ñ Wafer Fab Announcements

¥ Plans to build a second joint venture fab with Siemens. The future facility is to be located in Dresden, Germany, and will process 300mm wafers. The two partners have yet to draft a timetable for the plant.

¥ Delayed the expansion of its MOS 13 fab, located in Austin, Texas, that included the second- phase extension to the $1 billion fab. The new production line was originally scheduled to be in production in late 1997.

¥ Announced plans to build a $1.5 billion 64M DRAM fab near Richmond, Virginia, in partnership with Siemens. The jointly-owned facility, named White Oak Semiconductor, is scheduled to enter production in mid-1998.

¥ Delayed indefinitely, the construction of its MOS 19 fab, also near Richmond, to be used for the production of PowerPC devices. Motorola also announced its decision to delay construction of a new fab at its Aizu facility in Japan by one year. Construction was originally to start in 1997 with production set for 1998.

Motorola Ñ Key Agreements

¥ Signed an agreement under which it will receive ferroelectric RAMs (FRAMs) from Matsushita. The devices were developed jointly by Matsushita, the University of Colorado, and Symetrix Corporation (Colorado Springs, Colorado). Motorola will use the devices in a new class of IC identity and validation cards.

¥ Received the M32R/D microprocessor with embedded DRAM technology from Mitsubishi, in exchange for its 32-bit ColdFire RISC MPU and 68000 embedded MPU technologies. Mitsubishi will add the ColdFire and 680EC000 cores to its ASIC gate array and embedded- cell libraries. Motorola will offer the M32R/D MPU as a module in its FlexCore program and a macro in its standard-cell library.

¥ Signed an agreement to second-source MitsubishiÕs DINOR flash memory devices. There is also a discussion about a possible joint-venture fab to produce flash devices.

2-14 INTEGRATED CIRCUIT ENGINEERING CORPORATION Worldwide IC Vendors

¥ Transformed Nippon Motorola Microelectronics into a wholly-owned subsidiary of Motorola after requesting that Toshiba sell its stake in the venture. Their cooperative relationship still exists with their jointly owned manufacturing venture, Tohoku Semiconductor.

¥ Announced it would not join the IBM-Siemens-Toshiba DRAM development cooperative. Motorola will, however, continue its cooperative DRAM development with Toshiba.

¥ Entered into an agreement under which IC Works became an authorized second source of selected Motorola CMOS and BiCMOS mixed-signal timing circuits. Moreover, the two companies will work together to broaden their existing lines with complementary timing-circuit devices.

Motorola Ñ Product Briefs

¥ Announced two new fast SRAM devices in 4Q96. The first device is a 3.3V 4M fast SRAM that features 512Kx9 organization and operates from a single 5V power supply. The second device is a 2M BurstRAM. The device features 64Kx32 configuration and is claimed to reach speeds of 100MHz.

¥ Unveiled its new ÒMCUs-in-a-dayÓ program, in which 11 of MotorolaÕs best selling one-time programmable (OTP) devices will be available in one day shipments. Through March 1997, if the one-day shipment isnÕt met, enrolled customers receive free programming.

¥ Began sampling a 100MHz version of its DSP56303 in 4Q96. The DSP56305 is a 24-bit DSP featuring an 80MHz core. The device was produced using a 0.5µm triple-layer-metal process and was designed for use in wireless, telecommunications, and multimedia applications.

¥ Divided its Advanced Microcontroller Division (AMCU) into two separate divisions. The 68HC11/12 Custom Microcontroller Solutions Division will focus its efforts on the 68HC11 and 68HC12 product families while the AMCU Division will direct its efforts on the MPC500, 68300 and 68HC16 product families. The separation of AMCU is to provide better customer service and support for its individual product groups.

¥ Introduced a second-generation Dolby Digital AC-3 DSP device specifically targeted at the digital video disk (DVD) market. The DSP 56011 can replace up to four chips normally used in a DVD system.

¥ Introduced 225MHz and 240MHz versions of its PowerPC 603e microprocessor, developed with IBM. The two companies expect the 603e MPU to reach 300MHz by the end of 1997.

INTEGRATED CIRCUIT ENGINEERING CORPORATION 2-15 Worldwide IC Vendors

¥ Began volume shipments of its embedded PowerPC-based MPC860 family of microprocessors. The new devices are targeted at the Internet and data communications markets.

¥ Developed an integrated multimedia chip for TV set-top boxes using MPEG-2 technology that it licensed from LG Electronics and the Sarnoff Research Center. The multimedia chip includes MPEG-2 video and audio decompression, 3D graphics, a Coldfire 68000-enhanced microprocessor, and interface functions.

¥ Introduced a new FPGA family based on the Pilkington antifuse technology. The FPGAs are reprogrammable SRAM-based devices manufactured on a standard 0.6µm triple-metal-layer CMOS process. Motorola also licensed the field programmable analog array (FPAA) technology from Pilkington.

¥ Developed what it calls vector communications processor (VeComP) technology, which is based on a vector processing architecture known as single-instruction, multiple data (SIMD). Motorola plans to release a processor in 1997 that combines a PowerPC core with a SIMD vector array for wireless communications applications.

¥ Introduced the 16-bit 68HC12 microcontroller architecture, a source-code compatible evolu- tion of MotorolaÕs industry standard, 8-bit 68HC11 architecture.

¥ Unveiled a new fast SRAM technology that it claims will enable speeds as high as 200MHz, with a roadmap to 500MHz over the next few years. Motorola is developing 1M and 4M versions of the SRAMs, which are based on a 0.4µm BiCMOS technology. Volume production of the devices is set to begin in 1Q97.

¥ Rolled out an asynchronous transfer mode (ATM) cell processor that operates at 155 Mbits/s, the first device to use its customizable standard products (CSP) design methodology. Motorola began volume production of the chip in mid-1996.

Motorola Ñ Other Noteworthy News

¥ Reduced its workforce in its Austin Semiconductor Products Sector by 320 people in 4Q96. In September, Motorola closed its newest fab facility in Arizona, COM1, for a one-year period.

IBM Microelectronics Ñ Wafer Fab Announcements

¥ Plans to move from its current 0.5µm process to a 0.35µm process during 1997.

2-16 INTEGRATED CIRCUIT ENGINEERING CORPORATION Worldwide IC Vendors

¥ May start construction of another U.S.-based wafer fab facility in 1997. The fab will be used to produce logic devices with geometries of 0.35µm down to 0.25µm.

¥ Has stopped all DRAM production at its Yasu, Japan, fabrication facility due to plunging DRAM prices. The lines have been converted to allow for the fabrication of multimedia and logic devices.

¥ Investing $1 billion for the construction of a DRAM production line at its facility in Essonnes, France. The plant will initially fabricate 16M DRAMs, starting in early 1997. To make space for the 0.35µm CMOS processing line, IBMÕs existing bipolar line at the facility was closed down.

¥ Spending $400 million to upgrade its fab in Vermont to handle 0.35µm and 0.25µm technologies for the manufacture of PowerPC MPUs and embedded controllers, Mwave DSP chips, and other logic devices.

IBM Microelectronics Ñ Key Agreements

¥ Teamed up with Toshiba and Siemens to develop system-on-a-chip LSIs. The three companies will combine their technologies in an effort to reduce time-to-market and lower development costs.

¥ Signed an agreement with Mitsubishi that allows Mitsubishi to design and market embedded PowerPC microprocessors built by IBM. Under the agreement, Mitsubishi has access to IBMÕs complete line of PowerPC products, although, the agreement does not cover the high- performance desktop processors in the 600 series, such as the 604 and 603e. The contract covers a two-year period and will give Mitsubishi access to new MPU cores developed during the two-year period.

¥ Agreed to serve as a foundry to an ADI Technologies subsidiary, Audio Digital Imaging. IBM will manufacture and supply ADI with MPEG-1 and MPEG-2 audio/video chips.

¥ Agreed with Hughes Electronics to jointly develop commercial communications devices based on IBMÕs silicon-germanium (SiGe) semiconductor technology. The multiyear agreement calls for SiGe devices to be available as early as 1997.

¥ Granted licensing rights to Exponential Technology Inc., to develop and market high-performance BiCMOS microprocessors based on the PowerPC architecture.

INTEGRATED CIRCUIT ENGINEERING CORPORATION 2-17 Worldwide IC Vendors

IBM Microelectronics Ñ Product Briefs

¥ Introduced 225MHz and 240MHz versions of its PowerPC 603e microprocessor, developed with Motorola. The two companies expect the 603e MPU to reach 300MHz by the end of 1997.

¥ Announced the termination of its field programmable gate array (FPGA) development and production program. Tight market conditions was cited for its inability to enter this particular market. The company will direct its research and development of FPGAs into other areas within the company. IBM announced its entrance into the programmable logic market in 1993, but never began volume production of PLDs.

¥ Revealed an 8M synchronous graphics RAM (SGRAM) that it claims will run at 100MHz. The company expects to release a 125MHz version in 1Q97 and a 150MHz version by 3Q97.

¥ Expanded the capabilities of its CMOS 5S ASIC family with the release of enhanced versions. The enhancements include a linear shrink to 0.35µm effective channel length, increased gate count, and low-drive library elements.

¥ Announced its decision to sell 12 networking ICs on the merchant market. Previously, most of IBMÕs networking IC products were produced for internal consumption. IBM will market its ATM, Ethernet, and Token Ring chips as standard products and as integratable ASIC cores.

¥ Introduced the 6x86 P200+ microprocessor, jointly developed with Cyrix Corporation. The device is based on a Cyrix design and manufactured by IBM, using its 0.44µm five-layer metal, CMOS technology.

¥ Began offering high speed versions of its PowerPC 604 microprocessor at 166MHz and 180MHz.

¥ Began manufacturing 12ns and 15ns enhanced DRAMs (EDRAMs) for Ramtron subsidiary Enhanced Memory Systems Inc. Manufactured using IBMÕs 4M DRAM process, the EDRAMs will also be marketed under the IBM logo.

¥ Unveiled a three-chip MPEG-2 encoder chipset. The three devices include one to handle intra-frame coding, one for reconstruction of pictures, and one to do most of the motion estimation.

¥ Rolled out is PowerPC 401GF core, which is targeted at low-cost battery-operated systems. Initially offered in 25MHz and 50MHz, the 401GF consumes as little as 40mV (typical @ 25MHz) from a 2.5V power supply. 75MHz and 100MHz versions are expected before the end of 1996.

2-18 INTEGRATED CIRCUIT ENGINEERING CORPORATION Worldwide IC Vendors

¥ Revealed its most advanced ASIC family architecture, called System ASIC -12, which allows for up to 3.2 million usable gates. Volume production of SA-12 devices is expected to start in 2Q97.

National Ñ Wafer Fab Announcements

¥ Announced plans to invest an additional $181 million in its new 200mm wafer fab that is currently under construction in South Portland, Maine. The investment will add a 0.25µm production line.

National Ñ Key Agreements

¥ Acquired the PicoPower business unit from Cirrus Logic. National intends to combine its Super I/O technologies with PicoPowerÕs experience in notebook PC system logic.

¥ Teamed up with the Advanced Semiconductor Processing Group of IMEC, based in Belgium, to develop 0.25µm and 0.18µm process technologies for semiconductor manufacturing.

National Ñ Product Briefs

¥ Introduced a family of system-on-a-chip devices in September 1996 that is targeted at low- end applications such as household appliances, medical monitors, and portable handheld products. The devices feature a one-time programmable (OTP) 8-bit microcontroller with I/O and analog functions on the chip.

National Ñ Other Noteworthy News

¥ Spun off its logic and memory group into an independent subsidiary, named Fairchild Semiconductor. The new business will support all of NationalÕs bipolar, BiCMOS, and low- power CMOS logic families, EPROMs, EEPROMs, and application-specific flash memory devices. The company plans to sell off its discrete business.

Lucent Technologies Ñ Wafer Fab Announcements

¥ Announced plans to invest $145 million in its Madrid, Spain, facility in order to upgrade from 0.5µm to 0.35µm technology.

¥ Sold two idle fab lines (66,000 sq. ft.) in Missouri to startup Mid-West Microelectronics, which is upgrading the facility to serve as a foundry for non-volatile memory, custom memory, and microprocessor-related devices using a 0.5µm CMOS process.

INTEGRATED CIRCUIT ENGINEERING CORPORATION 2-19 Worldwide IC Vendors

Lucent Technologies Ñ Key Agreements

¥ Agreed to co-develop a 0.18µm manufacturing process with NEC. The 0.18µm process is expected to integrate memory, processing power, and application function into a single chip. The process should be completed in 1999. The two companies have worked together since 1991 and have jointly developed 0.35µm and 0.25µm IC process technologies.

¥ Formally announced its a joint-venture with Cirrus Logic in 4Q96, called Cirent Semiconductor. The venture, located in Orlando, Florida, will manufacture 200mm wafers for both of the partners.

¥ Agreed to work with Mitsubishi to jointly develop a chipset for next-generation high-definition television (HDTV) sets.

Lucent Technologies Ñ Product Briefs

¥ Introduced a chipset, dubbed Venus, that is the first to implement its Vflex2 56Kps modem capability. The chipset integrates modem controller functions, DSP functions, an ISA plug- in-play interface, and PC card 95 PCMCIA interface capabilities.

¥ Announced a two-year roadmap for its FPGAs. The plans calls to carry the ORCAª FPGA family to the 0.25µm process and 320,000 usable gate levels.

¥ Introduced its Silicon Suiteª program which brings together LucentÕs ASIC and FPGA standard products businesses together to provide system design and support. New product groups within the program are integrated packages of high-level ASIC cores, mixed-signal macrocell libraries, standard products, and system design tools, software, and services.

¥ Introduced the DSP1620, a device the company claims to be the fastest DSP available, featuring 120 MIPS performance. The device was manufactured using a 0.35µm process and is aimed at the wireless basestation and cellular market.

¥ Unveiled its 0.35µm CMOS process technology, which is optimized for ASICs and FPGAs. The new technology will support designs of 2.5 million usable gates, 200MHz system frequencies, and 1G/sec. I/O interfaces. The first product implementation is a series of ORCAª FPGAs with gate counts ranging from 4,000 up to 60,000.

2-20 INTEGRATED CIRCUIT ENGINEERING CORPORATION Worldwide IC Vendors

AMD Ñ Wafer Fab Announcements

¥ Began construction on Fab 30, a new $1.8 billion fab facility located in Dresden, Germany. The fab will be used to manufacture its K86 series of microprocessors and other future generations of its 32-bit MPUs on 200mm wafers using a 0.25µm process. Production is scheduled to commence in late 1998.

¥ Delayed for six months the construction of its second fab at its Fujitsu-AMD Semiconductor Ltd. joint venture in Aizu-Wakamatsu, Japan. The new fab will roughly double the siteÕs wafer capacity. Initial production was originally scheduled to begin in late 1997 at the 0.35µm level.

AMD Ñ Key Agreements

¥ Revised its partnership with Fujitsu to allow both companies to sell devices worldwide. In their previous agreement, AMD had exclusive rights to North America, Taiwan, and most of Europe, leaving Japan and United Kingdom exclusively to Fujitsu. The new agreement removes the geographical barriers as well as the difficulty of working with multinational companies.

¥ Signed a cross-license agreement with Cypress in 2Q96, ending its PLD litigation. The agreement calls for cross-licensing of certain PLD patents, but does not include technology or product exchanges.

¥ Licensed the ADSP 21xx digital signal processing core from Analog Devices Inc. AMD will use the core in upcoming ASIC products and plans to embed the core in communications related ICs.

¥ Signed a new five-year cross-licensing agreement with Intel in early 1996 that gave the two companies rights to use each otherÕs patents and certain copyrights, excluding microprocessor microcode beyond the 486 generation. The agreement gave AMD access to IntelÕs MMX instruction set extensions for multimedia functionality.

AMD Ñ Product Briefs

¥ Began sampling its sixth-generation AMD-K6 microprocessor and expects volume production to begin in the first quarter of 1997. The device will be manufactured using a 0.35µm 5- layer metal process and is expected to contain 8.8 million transistors. Separately, AMD is developing core-logic chipsets to support the K6 microprocessor.

INTEGRATED CIRCUIT ENGINEERING CORPORATION 2-21 Worldwide IC Vendors

¥ Announced new products from its K5 family with increased speeds of 120-133MHz, specifically targeted for the desktop PC market.

¥ Introduced two devices from its MACH5 high-density complex PLD family. The MACH5- 512 devices combine 7.5ns speeds and 512 macrocells with 100 percent utilization.

¥ Introduced the latest product from its E86 family, the Am486DX5-133 MPU. The device is manufactured on a 0.35µm, 3.3V CMOS process and designed for use in embedded applications.

¥ Developed a 2M 3V-only flash memory with partner Fujitsu. Designed using a 0.5µm CMOS process, the device features an access time of 120ns. Volume production began in late 1996 at Fujitsu and AMDÕs joint facility, FASL.

¥ Added digital signal processor (DSP) cores, as well as other cores, to its line of complex programmable gate arrays (CPLDs). AMD also released its plans for a new line of FPGAs that do not use antifuse technology.

¥ Rolled out a new family of 2.7V-only flash memory chips. The 0.5µm 8M AmLV800 device uses less than 1µA in stand-by or sleep modes, and has a read access time as fast as 100ns.

¥ Shifted its embedded product focus toward its E86 family and away from its venerable 29Kª family of embedded RISC processors. AMD will continue to support current product designs and customers using its 29K products. However, the development of new 29K devices was discontinued. AMD cited the high cost of supporting the proprietary architecture as the reason for discontinuing the product line.

AMD Ñ Other Noteworthy News

¥ Settled its dispute with Hyundai over flash memory trade secrets. Early in 1996, five former AMD employees were prohibited from performing certain job duties at Hyundai that AMD claimed could have compromised its flash memory design techniques. Details of the settle- ment were not known at the time of this writing.

¥ Spun off its PLD business as a wholly owned subsidiary in July 1996. The new subsidiary will design, develop, and market PLD products using AMDÕs process technology and manufacturing facilities.

2-22 INTEGRATED CIRCUIT ENGINEERING CORPORATION Worldwide IC Vendors

Micron Ñ Wafer Fab Announcements

¥ Completed its conversion to a 0.35µm DRAM manufacturing process in August 1996, from its previous 0.45-0.40µm process.

¥ Delayed the expansion of two of its Boise, Idaho, fab facilities from 150mm wafers to 200mm wafers. As of mid-1996, approximately half of the conversion had been accomplished. Fab III has already been converted.

¥ Delayed equipping its new Lehi, Utah, facility due to the softening memory market.

Micron Ñ Product Briefs

¥ Introduced what it claimed was its fastest 16M DRAM device with access speed of 50ns. The 5V device was manufactured using a 0.35µm process and is available in a 4M x 4 or 2M x 8 configuration.

¥ Released a series of flash memories in 4Q96, in an effort to lessen its dependence on the DRAM market. It released Intel-compatible 2M and 4M SmartVoltage flash memories, using the SmartVoltage core that Micron licensed from Intel.

¥ After years of development, began beta testing a microwave radio IC Micron calls a MicroStamp (it is about the size of a postage stamp). The device is a 20-pin CMOS small- outline IC (SOIC) that integrates a 2.4GHz direct-sequence spread spectrum (DSSS) microwave frequency radio, a microcontroller, and a low-power SRAM. Potential applications for this device include automatic inventory, electronic toll collection, and various secu- rity tracking measures. First products to be released incorporating this device are expected in the first half of 1997.

¥ Announced an 8M SDRAM-based IC for mass-volume, 3D graphics applications. Organized as 256K x 8, the synchronous graphics RAM (SGRAM) IC is designed to operate in 3.3V, low- power memory systems.

Rockwell Semiconductor Systems Ñ Wafer Fab Announcements

¥ Broke ground on its $1.2 billion ÒmegafabÓ located in Colorado Springs, Colorado, in 1Q96. However, later in the year, Rockwell announced a one year delay of construction.

INTEGRATED CIRCUIT ENGINEERING CORPORATION 2-23 Worldwide IC Vendors

Rockwell Semiconductor Systems Ñ Key Agreements

¥ Established a long-term agreement with Submicron Technology, based in Thailand. Under the deal, Rockwell agreed to transfer its 0.5µm and 0.35µm process technologies to SubmicronÕs 200mm wafer fab, which is currently under construction. In exchange, Rockwell will receive a guaranteed supply of 200mm wafers. Production at SubmicronÕs fab is expected to begin in 2Q97.

Rockwell Semiconductor Systems Ñ Product Briefs

¥ Introduced a new family of ICs, called WaveArtist, which integrate 3D audio spacialization and FM and MIDI wavetable synthesis with RockwellÕs 33.6 Kbit/sec modem technology.

¥ Rockwell sampled its new line of 56 kilobit-per-second modem chipsets in late 1996.

Rockwell Semiconductor Systems Ñ Other Noteworthy News

¥ Acquired Brooktree Corporation for $275 million. Brooktree will operate as a division of Rockwell. From the acquisition, Rockwell gains BrooktreeÕs high-speed digital subscriber loop and ATM communications chipsets, as well as a line of encoders/decoders for PC video conferencing and digital entertainment applications.

LSI Logic Ñ Key Agreements

¥ Extended and expanded its licensing agreement with MIPS Technologies. Under the original agreement, LSI developed its popular 32-bit MiniRISC microprocessor cores. The new license extends through the year 2000. A result of the agreement was the TinyRISC MPU core announced in October 1996. The 16-bit device is manufactured on the companyÕs 0.25µm Leff G10 process and is optimized for embedded applications.

¥ Announced a 10 year joint-development agreement with High Level Design Systems (HLDS) to create deep-submicron IC design methodologies and ASIC design kits. The agreement also calls for LSIÕs 0.25µm and 0.35µm process technology and CoreWare design methodology to be integrated with HLDSÕ expertise in IC floorplanning, and for LSI Logic to use HLDSÕ tools internally and in its own design centers.

¥ Formed a development alliance with Argonaut Software under which the two companies will provide support for graphics subsystem content providers. Development of a graphics accelerator core, which both companies will share licensing rights to, is scheduled to be complete by the end of 1997.

2-24 INTEGRATED CIRCUIT ENGINEERING CORPORATION Worldwide IC Vendors

LSI Logic Ñ Product Briefs . ¥ Added the new Gigabit SeriaLinkª interface core to its CoreWare cell library. The CMOS- based Gigabit SeriaLink supports the Fibre Channel data transmission protocol, which allows for the transmission of up to 1.0625 billion bits of data per second, the equivalent of several 350-page novels a second.

¥ Created a new division called the Wireless Communications Business Unit to provide support for current and future wireless devices. The division introduced its first product, a single chip device that offers baseband processing capabilities for cell phones, in 4Q96. The device is based on the Global System for Mobile communications (GSM) standard.

¥ Entered the MPEG-2 encoder chip market with the introduction of the Video Instruction Set Computing (VISC) chipset. The VISC set consists of three chipsÑthe video interface processor (VIP), the advanced motion estimation processor (AMEP), and the advanced video signal processor (AVSP). Each of the devices is based on a stripped down version of the MIPS R4000 microprocessor.

NORTH AMERICAN CAPTIVE IC MANUFACTURERS

ICEÕs definition of a captive integrated circuit manufacturer is provided in Figure 2-11. The main criteria for an IC manufacturer to be labeled ÒcaptiveÓ is that no more than 25 percent of its device production is sold on the open market, in terms of dollars. Typically, a captive manufacturer is a well established manufacturer of electronic systems that designs and produces ICs internally to help differentiate its systems from the competition. ICE also classifies R&D laboratories as captive (Figure 2-12).

¥ Sells less than approximately 25 percent of its IC production to the open market

¥ Has the primary goal of serving in-house needs

¥ May or may not possess a dedicated open-market sales force

Source: ICE, "Status 1997" 8392D

Figure 2-11. Captive IC Producer Guidelines

INTEGRATED CIRCUIT ENGINEERING CORPORATION 2-25 Worldwide IC Vendors

¥ Los Alamos National Labs Ð Los Alamos, New Mexico ¥ MCC Ð Balcones Research Center Ð Austin, Texas ¥ Microelectronics Center of North Carolina Ð Research Triangle Park, North Carolina ¥ Sandia National Labs Ð Albuquerque, New Mexico ¥ Sematech Ð Austin, Texas

Source: ICE, "Status 1997" 18938

Figure 2-12. Major North American Semiconductor Research Laboratories

The majority of the worldÕs captive IC manufacturers are based in North America. Of course, there are many Japanese and European system manufacturers that transfer a great deal of ICs internally. However, they generally sell more than 25 percent of their ICs on the open market and thus are not classified as captive.

North AmericaÕs captive IC manufacturers include Hewlett-Packard, Hughes Electronics (Hughes Aircraft and Delco Electronics), Digital Equipment, Nortel (Northern Telecom), Medtronic, and until 1995, IBM. By definition, IBM became a merchant manufacturer of ICs in 1995 due to the tremendous growth of its external IC business.

Figure 2-13 provides details about the captive IC fabrication facilities currently in operation.

Former Captive IC Producers

Besides IBM, there are many other system manufacturers that were once captive producers of ICs (Figure 2-14). Several of the companies, like IBM, saw the external portion of their IC businesses increase to the point at which they could be considered merchant. Meanwhile, a number of the former captives discontinued internal IC production completely in favor of out-sourcing devices, such as ASICs. For many, the availability of ASICs eliminated the need for in-house fabrication, while still allowing for some customization of the ICs they use in their systems. Figure 2-15 lists some of the large system manufacturers that do not produce their own ICs.

Figure 2-16 gives some of the advantages and disadvantages of captive IC production. As already mentioned, one of the major justifications for captive production is the availability of proprietary devices that help to differentiate oneÕs electronic systems. Another major advantage is the continuity of IC supply. Unlike fabless OEMs, captives do not always depend on the well-being of the companies from which they receive their IC supply. Captives also have the ability to maintain a supply of obsolete ICs that may be unavailable elsewhere.

2-26 INTEGRATED CIRCUIT ENGINEERING CORPORATION Worldwide IC Vendors

Wafer Company Location Technology Products/Comments Size

Aerojet Electronics Azusa, CA 100mm GaAs, MOS Military prototypes, satellite sensors

The Aerospace Corporation El Segundo, CA 100mm CMOS, SOS, SOI Custom prototype military and rad-hard circuits

Allied Signal Columbia, MD 100mm CMOS, BiCMOS, BCD, GaAs; 1.2µm ASICs; selective outside customers

Cray Research Chippewa Falls, WI 100,200mm Bipolar, GaAs, BiCMOS/ECL/CMOS; 200mm line is for pilot production of ASICs ≥0.5µm

Digital Semiconductor Hudson, MA 100-200mm Bipolar, CMOS; 0.35 - 2.5µm MPUs, MCUs, MPRs, ASICs, logic ICs, and custom ICs

John Fluke Manufacturing Everett, WA 100mm PMOS, CMOS, BiCMOS; 2.0µm Custom linear ICs and some digital ICs

Hughes Electronics Delco Electronics Kokomo, IN 100,125mm HMOS, NMOS, CMOS, Bipolar; 0.8 - 2.0µm ASICs, MPUs, MCUs, linear ICs, and logic ICs Hughes Aircraft Company Torrance, CA 3in GaAs MMICs, MM wave devices, and subsystems Newport Beach, CA 100mm CMOS, BiCMOS, SOS, CryoCMOS; ASICs, MPUs, memory ICs, LCD drivers, rad-hard ICs, 1.25 - 0.5µm analog ICs, and foundry services

Hewlett-Packard Company Fort Collins, CO 150mm Bipolar, CMOS; 0.5 - 1.0µm MPUs, RFICs, microwave ICs, and ASICs Corvallis, OR 150mm CMOS; 0.5 - 1.0µm ASICs and MPUs San Jose, CA 3in, 100mm Bipolar, GaAs; 0.5 - 5.0µm ASICs; optoelectronics Newark, CA 100mm Bipolar Analog ICs, RFICs Avantek, Inc. Santa Clara, CA 3in GaAs MMICs

Lockheed Martin Palo Alto, CA 125mm CMOS, SOS, GaAs; ≥1.5µm R&D and pilot production of ASICs and rad-hard ICs Orlando, FL 3in, 100mm CMOS, GaAs; ≤1.25µm MMICs and custom circuits for MM wave radar systems Fort Worth, TX 100mm MOS R&D of custom military products Lockheed Sanders Nashua, NH 3in GaAs; ≥0.25µm Microwave, MMIC, and linear prototype ICs, and ASICs

Medtronic Micro-Rel Tempe, AZ 100,150mm Bipolar, CMOS, BiCMOS; 0.8µm-1.5µm Linear, digital, and mixed-signal ASICs and full-custom ICs

Nortel (Northern Telecom) Ottawa, Canada 150mm CMOS, BiCMOS; 0.5 - 1.2µm Custom and cell-based ICs

Northrop Grumman Baltimore, MD 3in, GaAs, Bipolar, CMOS, MOS; ≤3.0µm R&D through pilot production of ASICs, linear ICs, MPUs, 100,150mm memroy ICs, and MMICs

Watkins-Johnson Palo Alto, CA 3in GaAs Microwave circuits

Source: ICE, "Status 1997" 9477P

Figure 2-13. North American Captive IC ManufacturersÕ Fab Facilities

Major disadvantages to captive IC production include the high cost of developing advanced submicron chips and the higher cost of building and maintaining state-of-the-art fabrication facilities in which to make them. This is believed to be the main reason IBM Microelectronics launched a worldwide microelectronics effort in 1992 by offering to sell virtually every product and service in its technology portfolio. Another likely reason stems from the fact that the semiconductor industry is in an era of increasingly open standards. In order for IBM MicroelectronicsÕ chip designs to set standards, they have to be sold to more customers than just IBM Corporation.

Captive IC Production Values

For comparison with merchant IC companies, ICE categorizes captive firms according to the Òif soldÓ value of their IC production. This value includes development costs and non-recurring expenses comparable to what would be charged if the work were contracted to an outside vendor. Estimates of the 1996 IC production value for each of the major captives is given in Figure 2-17.

INTEGRATED CIRCUIT ENGINEERING CORPORATION 2-27 Worldwide IC Vendors

Year of Company Status Change Amdahl 1985 Discontinued internal IC production

Honeywell 1987 Reclassified as a merchant

UTMC 1987 Reclassified as a merchant

Tektronix 1987 Reclassified as a merchant

Unisys 1988 Phased out volume IC production

Data General 1988 Discontinued internal IC production

AT&T 1989 Reclassified as a merchant

Western Digital 1989 Reclassified as a merchant

Honeywell 1989 Kept solid state electronics center, Plymouth, MN; sold digital products center, Colorado Springs, CO; reclassified as a captive

Cray Computer 1990 Started captive GaAs IC line Eastman Kodak 1990 Discontinued internal IC production Ford Automotive 1990 Discontinued internal IC production Loral Aeronutronics 1991 Discontinued internal IC production Honeywell 1992 Reclassified as a merchant Unisys 1993 Discontinued internal IC production Commodore 1994 Discontinued business Rockwell 1994 Reclassified as a merchant McDonnell Douglas 1994 Discontinued internal IC production Xerox 1995 Discontinued internal IC production IBM 1995 Reclassified as a merchant Westinghouse 1996 Sold fab to Northrop Grumman

Source: ICE, "Status 1997" 13385H

Figure 2-14. Companies That Have Changed Captive Status

¥ Amdahl ¥ McDonnell Douglas ¥ Apple Computer ¥ Prime Computer ¥ Boeing ¥ Storage Technology Corp. ¥ Compaq Computer Corp. ¥ Sun Microsystems ¥ Convex Computer ¥ Tandem Computers ¥ Data General ¥ Unisys ¥ Ford Motor Company ¥ Wang Laboratories ¥ Intergraph Corporation ¥ Xerox

Source: ICE, "Status 1997" 11313G

Figure 2-15. ÒFablessÓ System Manufacturers

2-28 INTEGRATED CIRCUIT ENGINEERING CORPORATION Worldwide IC Vendors

DISADVANTAGES

ADVANTAGES DISADVANTAGE DESCRIPTION Capital Investment Fabrication cleanrooms and equipment cost over a billion ADVANTAGE DESCRIPTION dollars

Proprietary Unique ICs can provide In-house ICs Favored Difficult to capitalize on open Circuits competitive edge market bargain prices

Reliability Control Direct IC quality control Lacking Second Source Second source provides insurance can improve end product Learning Curve Lower volume Innovation Improved systems designed in at chip level Attracting Key Personnel Many captives lack glamour and appeal of merchants Quick Turnaround Especially important for “Hot” products

Continuity Of Supply System house not dependent on open market

Source: ICE, "Status 1997" 12100C

Figure 2-16. Major Advantages and Disadvantages for Captive IC Production

1996/1995 1996 Company 1995 Percent (EST) Change

Hewlett-Packard 655 740 13

Digital Semiconductor 305 375 23

Hughes Electronics 340 330 Ð3 Hughes Aircraft 100 80 Ð20 Delco Electronics 240 250 4

Medtronic Micro-Rel 125 140 12

Nortel (Northern Telecom) 110 120 9

Northrop Grumman 22 25 14

Others 73 70 Ð4

Total 1,630 1,800 10

Source: ICE, "Status 1997" 13631K

Figure 2-17. Captive IC Production Values

Overall, the value of captive IC production in North America grew 10 percent in 1996. As can be seen, without IBMÕs estimated $5.1 billion in IC production in 1996, the total value of captive IC production is minimal compared to the size of the merchant IC industry.

INTEGRATED CIRCUIT ENGINEERING CORPORATION 2-29 Worldwide IC Vendors

Merchant market activities of the major captives are given in Figure 2-18. Most of the companies are increasing the emphasis on their external IC businesses. One exception is Hewlett-Packard. Faced with a shortage of manufacturing capacity, HP made a strategic decision in late 1993 to exit the external IC foundry business in order to focus on internal needs.

Percent of 1996 1994 1995 1996 Merchant IC IC Production Merchant Company Value Value Value Offerings Value Sold to Emphasis ($M) ($M) ($M, EST) Merchant Market

Hughes Electronics ASICs, GaAs ICs, 81 80 80 24 Stable automotive ICs

Northrop Grumman GaAs ICs, memory ICs, 4 5 6 24 Increasing MPUs, and linear ICs

Digital Semiconductor MPUs, logic ICs, graphics 25 50 85 23 Increasing ICs, foundry

Medtronic Micro-Rel Foundry, ASICs 16 16 18 13 Stable

Hewlett-Packard Telecom and datacom 45 40 35 5 Decreasing ICs, MPUs

Source: ICE, "Status 1997" 13384K

Figure 2-18. Merchant Activities of Captive IC Manufacturers

Provided below are selected IC-related announcements made by some of the major North American captive companies in 1996.

Captive IC Manufacturer Highlights

Hewlett-Packard

¥ Hewlett-Packard announced that its latest 64-bit PA-RISC MPU (PA-8200) would be sampled to its partners in late 1996. The 220MHz processor is scheduled to ship in HP systems by mid-1997. The PA-8200 is produced using a five-layer 0.5µm 3.3V CMOS process and con- tains 3.8 million transistors. The 17.68mm x 19.1mm die is housed in a 1,085-pin flip-chip ceramic LGA.

¥ HP was planning on building an IC fab in Taiwan. The plan was canceled in mid-1996.

¥ HP exited the disk-drive business in 1996.

¥ HP broke off its foundry partnership with Tower Semiconductor in mid-1996. Tower was producing 0.8µm CMOS ICs for HP.

¥ HP licensed MotorolaÕs 68000 and ColdFire core processors for use in its ASIC products.

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¥ HP announced three new GaAs ICs it was targeting to sell to the wireless communications market.

Hughes Electronics

¥ Hughes Electronics and IBM agreed to jointly develop silicon-germanium (SiGe) ICs for use in high-speed wireless and sensing applications (e.g., automotive radar).

Digital Semiconductor

¥ Digital Semiconductor announced a 500MHz Alpha RISC MPU in late 1996. Digital plans to offer a low-cost Alpha (21164PC), which was jointly developed with Mitsubishi, in 1997. The low-cost Alpha is intended to compete with IntelÕs Pentium Pro device in the under-$3,000 PC market. As of 4Q96, Samsung, DigitalÕs other partner for Alpha production, had not signed on as a second-source for the 21164PC device.

¥ In 4Q96 Digital released its FX!32 software program that allows Windows NT/Intel applications to run on Alpha-based systems. FX!32 initially ran Windows NT programs at about 50 percent of native Alpha performance. A mark of 70 percent was expected in 1997.

¥ Digital and VLSI Technology entered into an agreement to design and develop system logic chips for Alpha systems.

¥ DEC took a $475 million change against earnings in its 4Q of FY96 and said that 7,000 jobs would be eliminated by mid-1997 as a result of poor results in its FY96.

¥ Digital Semiconductor converted from 0.5µm to 0.35µm processing at its facility in Hudson, MA in 1996.

¥ DigitalÕs StrongARM RISC MPU, targeted at the non-DEC embedded open market, continued to ramp up volume. One design win announced in late 1996 included AppleÕs Message Pad 2000 handheld system. Digital expected to ship 10K-15K units per month of the StrongARM chip beginning in December of 1996. Digital estimated that up to 25 percent of the Hudson, MA facilityÕs capacity in 1997 may be used to produce the StrongARM chips.

Medtronic Micro-Rel

¥ Medtronic Micro-Rel plans to upgrade from 100mm to 150mm wafers and transition from 1.5µm to 0.8µm technology at its fab in Tempe, Arizona, by March of 1997.

INTEGRATED CIRCUIT ENGINEERING CORPORATION 2-31 Worldwide IC Vendors

U.S. MILITARY IC TRENDS

The U.S. military industry continues to shrink as a percentage of the U.S. GDP (Figure 2-19). After the year 2000, military spending is forecast to represent less than three percent of the total U.S. GDP.

35 WWII 30

20 Korean War Percentage 15 Vietnam 10

5 Clinton Budget 0 40 45 50 55 60 65 70 75 80 85 90 95 00 05 Year Source: Henderson Ventures/ICE, "Status 1997" 21764

Figure 2-19. U.S. National Defense Outlays as a Percent of GDP

The good news for military IC suppliers, however, is that military spending for electronics is forecast to rise from 1996 to 2006 (Figure 2-20). From 1986 to 1996 the total U.S. military spending for electronics declined at an average rate of four percent per year. The ten year forecast from 1996 to 2006 calls for a CAGR of 1.4 percent per year.

The three major categories that make up the military electronics budget include R&D, Procurement, and Operations and Maintenance. The military has initiated a plan to decrease spending on electronics R&D through 2006 (Ð2 percent CAGR). Offsetting the decline in R&D spending over the next 10 years will be increased spending in the Procurement (2.4 percent CAGR) and Operations and Maintenance* (3.5 percent CAGR).

Unfortunately, the military IC market has not been immune from many of the cutbacks that have been taking place over the years at the Pentagon. Many military IC suppliers have found them- selves squeezed between two factorsÑa steep drop in defense spending, which hit the semiconductor industry harder than first anticipated, and the growing acceptance of commercial off-the-shelf (COTS) electronic components in military systems. It is these two factors that led

* Includes weapons upgrades.

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AMD and Motorola to announce the termination of their military semiconductor product lines by mid-1996. As part of MotorolaÕs exit from the market, it sold to Omnirel, Inc. in May 1995, various manufacturing assets, test equipment, and finished goods from its military operation. In November 1995, Altera made its formal announcement to exit the military IC business. However, it continued to ship military-grade ICs through 1996.

R&D, Test and 50 Evaluation

Procurement 20 Constant 1995 Dollars (Billions)

Operations and Maintenance

0 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 (EST) Year (FCST) Source: Electronic Industries Association/ICE, "Status 1997" 19537C

Figure 2-20. Electronic Content of DoD Budget

Figure 2-21 shows how the military percent of the total semiconductor market has declined in the past two decades. In 1975, the military semiconductor market accounted for 17 percent of the total semiconductor market. In 1996, it accounted for about one percent of the total semiconductor market.

As the defense budget dwindles, the military will be required to buy more commercial-grade products. The military procurement environment has changed dramatically since Defense Secretary William Perry announced a directive in June of 1994 that commercial-grade parts be used whenever possible (Figure 2-22).

As a way to lessen the paperwork and testing burden of the military IC producer, military standard Mil-Prf-38535 was developed. This standard allows IC manufacturers to have individual fabrication lines certified. Thus, any device that was produced by a Mil-Prf-38535 fab would qual- ify as an acceptable military part.

INTEGRATED CIRCUIT ENGINEERING CORPORATION 2-33 Worldwide IC Vendors

140 $135 20

17% 120

15 100

80 10 60 7.5% (Billions of Dollars)

40 Semiconductor Market 5 Military Percent of Worldwide Worldwide Semiconductor Sales $24 20 1.1% $4.2 $0.7 $1.8 $1.5 0 0 1975 1985 1996

= Total Worldwide Semiconductor Market

= Total Worldwide Military/Aerospace Semiconductor Market

Source: TI/ICE, "Status 1997" 18958G

Figure 2-21. Declining Military/Aerospace Presence

Initial directive announcement made in late June 1994.

Perry ordered that all DoD procurement contracts, including those for semiconductors, use commercial and industrial specs and standards where they exist. The use of a mil-spec device will require a waiver. Radiation-hardened components are exempt from the directive.

Clarifications of and additions to the directive announced in October 1994.

¥ The action does not eliminate military specifications and standards.

¥ It applies only to actions by the government and does not apply to standards proposed by a bidder in response to an RFQ.

¥ If no commercial alternative exists that is cost effective, then a waiver may be granted.

¥ Military specifications may be used for reprocurement of items already in inventory.

¥ Military specifications may be cited "for guidance only."

¥ A market analysis will be required for every new program to ascertain if commercial products are available.

¥ Non-government standards such as those used by the automotive industry are preferable alternatives.

Source: ICE, "Status 1997" 20237A

Figure 2-22. William PerryÕs Initiative

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These certified fab lines are known as QML (Qualified Manufacturing Line) facilities. The companies that hold QML certification (as of 4Q96) are shown in Figure 2-23.

AMI Lockheed Martin Federal Systems Analog Devices Lucent Austin Semiconductor Motorola Cypress National Harris Philips Honeywell SSEC Signal Processing Technologies Intel Siliconix Linear Technology TI Linfinity UTMC

Source: ICE, "Status 1997" 21763

Figure 2-23. QML (Mil-Prf-38535) Certified IC Suppliers

As a way to further reduce IC costs to military contractors, a Defense Department report on semiconductor packaging, released in early 1996, urged the Pentagon to explore buying more plastic- encapsulated ICs in place of more costly ceramic-packaged devices. According to the report, ceramic packages constitute more than 90 percent of all chips used in military systems, but that they are more expensive and, in many cases, are no more reliable than state-of-the-art plastic- packaged ICs available on the commercial market.

Figure 2-24 provides a look at the Digital Bipolar 7% worldwide market for military/ Discrete and Optoelectronics aerospace semiconductors in 1996 8% by device type. Digital signal MOS Micro Analog 10% 28% processors (DSPs), programmable 1996 logic devices (PLDs), and mono- $1.5B MOS Memory lithic microwave ICs (MMICs) are a 19% MOS Logic 28% few of the products that are actually displaying growth in the military IC market. Source: ICE, "Status 1997" 18537F Figure 2-24. Worldwide Military/Aerospace Semiconductor Market

INTEGRATED CIRCUIT ENGINEERING CORPORATION 2-35 Worldwide IC Vendors

In contrast, discretes and bipolar IC products will not be as large a share of the market in the future. Older ICs that once were in demand, but do not now require the dedicated support of a Òleading-edgeÓ supplier, are given over to companies such as Lansdale Semiconductor, which manufactures and supports discontinued IC products on a continuing basis, making it possible to extend the lifecycle of past and present technologies.

One of the bright spots in the military IC industry over the past few years has been the aerospace market. The satellite communications marketplace has been growing at a phenomenal rate in the mid-1990Õs and is forecast to continue this growth past the year 2000.

ICE estimates that about one-fourth of the 1996 military IC market ($1.4 billion) was for radiation- hardened or radiation-tolerant ICs ($350 million). Figure 2-25 shows the characteristics of these specialty devices. It should be noted that most space applications are able to use radiation-tolerant type devices as opposed to the more expensive radiation-hardened ICs.

Rad-Hard Rad-Tolerant Commercial

Designed for specific Hardness offered as a Hardness limited by hardness level by-product of the design inherent process and design; customer risk

Total dose: >200 krad Total dose: 20 krad to Total dose: 2 krad to to >1 Mrad 50 krad (typical) 10 krad (typical)

SEU threshhold LET: SEU threshhold LET: SEU threshhold LET: 80-150 MeV/mg/cm2 20 MeV/mg/cm2 (typical) 5 MeV/mg/cm2 (typical)

SEU error rate: 10E-10 SEU error rate: 10E-7 SEU error rate: 10E-5 to 10E-12 errors/bit-day to 10E-8 errors/bit-day errors/bit-day (typical)

Latchup: silicon on Latchup: customer Latchup: customer insulator technologies; evaluation and risk evaluation and risk no latchup problems

Source: Harris Semiconductor/Military & Aerospace Electronics/ICE, "Status 1997" 21762

Figure 2-25. Rad-Hard IC Characteristics

The top ten U.S. military/aerospace IC manufacturers and their sales estimates are shown in Figure 2-26. Grabbing the headlines over the last two years were the stories of lessening emphasis or the phasing-out (e.g., Motorola) of military semiconductor businesses. Luckily for military semiconductor users, companies like TI and Intel stated that they were looking to increase their military business by gaining marketshare others were leaving behind.

In general, the military/aerospace market is being influenced by numerous Òforces.Ó Figure 2-27 shows some of the positive and negative influences on the market. Although there are some factors that will positively affect the military semiconductor market in the future, the edict to use commercial ICs whenever possible in military systems will negate these factors.

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1996 Sales 1996/1995 Military/Aerospace Rank Company (EST) 1995 Sales Percent Change Emphasis

1 Harris 150 150 — Steady* 2 National 147 140 5 Steady 3 TI 145 135 7 Steady/Increasing 4 Analog Devices 140 132 6 Steady 5 Intel 120 110 9 Steady/Increasing 6 LSI Logic 80 76 5 Steady 7 Honeywell 45 42 7 Steady 8 Raytheon 35 35 — Steady 9 AMI 33 29 14 Steady 10 Motorola 30 65 Ð54 Decreasing — Others 160 176 Ð9 Decreasing Total 1,085 1,090 — Steady *Decreasing Military, increasing Aerospace. Source: ICE, "Status 1997" 12137R

Figure 2-26. Top Ten U.S. Military/Aerospace IC Suppliers ($M)

Negative Ð Edict to use more commercial ICs in military systems. Ð Flat military electronics budget. Ð Increasing use of cheaper plastic packaged devices.

Positive + Increasing IC content in military electronic systems. + Increasing rad-hard aerospace market. + End-of-life buys temporarily increased military IC market (1995-1996).

Source: ICE, "Status 1997" 19539

Figure 2-27. Factors Influencing the Military/Aerospace IC Market

JAPANESE IC VENDORS

Integrated circuit sales for Japanese companies decreased 18 percent in 1996 in terms of U.S. dollars, or five percent in terms of Japanese yen (Figure 2-28). This compares to a 1995 increase of 35 percent in terms of U.S. dollars, or 24 percent in terms of Japanese yen.

As can be seen, all of the Japanese companies in the figure are estimated to have experienced a decline in 1996. The collapse of DRAM prices in 1996, coupled with yen-to-dollar exchange rate fluctuations prevented the Japanese companies from repeating the strong year they had in 1995.

INTEGRATED CIRCUIT ENGINEERING CORPORATION 2-37 Worldwide IC Vendors

1995 1996/1995 1996 (EST) 1996 Company Percent Rank MOS Bipolar Total Change MOS Bipolar Total

1 NEC1,2 10,395 650 11,045 Ð17 8,650 550 9,200 2 Hitachi1,2 7,805 825 8,630 Ð18 6,290 800 7,090 3 Toshiba1 7,535 1,080 8,615 Ð19 6,050 920 6,970 4 Mitsubishi1,2 3,995 440 4,435 Ð20 3,150 400 3,550 5 Fujitsu1,2 3,580 430 4,010 Ð20 2,940 285 3,225 6 Matsushita1,2 1,670 930 2,600 Ð14 1,395 840 2,235 7 Sanyo1 1,255 990 2,245 Ð16 985 900 1,885 8 Sharp 1,910 110 2,020 Ð13 1,660 100 1,760 9 Sony 1,305 570 1,875 Ð18 1,140 400 1,540 10 Oki2 1,990 40 2,030 Ð32 1,350 30 1,380 11 Seiko Epson1 950 — 950 Ð13 825 — 825 12 Rohm1 315 515 830 Ð14 310 400 710 13 Yamaha 515 — 515 Ð13 450 — 450 14 Nippon Steel 580 — 580 Ð35 375 — 375 15 KTI Semiconductor 500 — 500 Ð30 350 — 350 16 Ricoh1 355 — 355 Ð11 315 — 315 17 Asahi Kasei Microsystems 250 — 250 Ð16 210 — 210 18 Seiko Instruments 240 — 240 Ð13 210 — 210 19 Fuji Electric1 130 45 175 Ð14 110 40 150 20 Kawasaki Steel 100 — 100 Ð10 90 — 90 Others 385 95 480 Ð18 325 70 395 Total 45,760 6,720 52,480 Ð18 37,180 5,735 42,915 1995: 94´=$1.00 1996: 109´ = $1.00 1BiCMOS ICs included under MOS. 2GaAs ICs included under MOS. Source: ICE, "Status 1997" 20455B

Figure 2-28. Japanese CompaniesÕ IC Sales (Calendar Year, $M)

While Japanese IC manufacturers are heavily dependent on the DRAM market, they are placing a high degree of emphasis on non-memory devices. Development work is very active in data compression chips, networking ICs, and microprocessors for PDAs, high-performance game systems, and other multimedia equipment.

Top Ten Japanese Vendor Highlights

NEC Ñ Wafer Fab Announcements

¥ Intended to begin the expansion of its Roseville, California, fab facility in May of 1996, but announced that the expansion may be delayed until 1998 or 1999 due to soft DRAM market conditions.

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¥ Expects to establish a 300mm wafer processing line in 1998.

NEC Ñ Key Agreements

¥ Decided not to commission ASIC production to TSMC, something it had planned to do within fiscal 1996. Because of price reductions in the 16M DRAM market, NECÕs domestic production facilities decreased the rates of operations, thereby making room for production of ASICs.

¥ Agreed to co-develop a 0.18µm manufacturing process with Lucent Technologies. The 0.18µm process is expected to integrate memory, processing power, and application-specific functions into a single chip. The process should be completed in 1999. The two companies began working together in 1991 and have jointly developed 0.35µm and 0.25µm IC process technologies.

¥ Licensed the PicoJava chip core from Sun Microsystems. NEC plans to use the core in a new multimedia chip designed for Internet-surfing TV sets. In a separate agreement, NEC licensed Advanced RISC MachinesÕ ARM microprocessor core for use in highly integrated multimedia chips that it had planned for the future.

¥ Licensed its 78K series 16-bit microcontrollers to Samsung, who will produce mask-compatible MCUs as a second source. Samsung may also use the 78K series as a 0.8µm, 16-bit core for ASICs.

NEC Ñ Product Briefs

¥ Introduced its next-generation high-speed 32-bit RISC microcontroller. Based on the V850 MPU core, the device was designed for embedded control applications and features on-chip DSP functionality with flash memory. The devices operates at 33MHz at 3V and is capable of processing 38 million instructions per second (MIPS).

¥ Began production of the VR4101 64-bit RISC processor, which integrates a low-power MIPS core with the peripheral circuitry needed for portable systems. The device is based on a 0.35µm CMOS process.

¥ Entered the flash memory market with the initial production of 4M and 8M devices. By the end of 1997, NEC also plans to produce 256M flash chips co-developed with SanDisk Corporation.

INTEGRATED CIRCUIT ENGINEERING CORPORATION 2-39 Worldwide IC Vendors

¥ Developed what it calls a parallel image processing RAM (PIP-RAM), which integrates 128 processing elements (PEs) and a 16M DRAM. The device was designed using a triple well process to isolate the processor well from those of the DRAM to suppress logic circuit noise and reduce processor power dissipation. It also features a high-speed 143MHz external bus.

¥ Sampling an 8M Rambus DRAM (RDRAM). The device is manufactured using a 0.45µm CMOS process and organized as 1M x 8.

¥ Released a TransProcessor communications IC. The device is an application-specific standard product (ASSP) with a sustained data transfer rate of 2.5 megabytes per second.

NEC Ñ Other Noteworthy News

¥ Spun off the R&D group of its Data Communications Systems Division into a separate company called HolonTech Corporation. The new company was established to focus all its effort on network computing software and components. Its first products are not expected to be introduced until mid-1997.

Hitachi Ñ Wafer Fab Announcements

¥ Investing $1.1 billion to build a 200mm wafer fab facility in Ibaraki Prefecture, Japan. The facility will begin production of 64M DRAMs, using a 0.35µm CMOS process, in 1998. The fabÕs wafer capacity will be 7,500 wafers per week.

¥ Formed a joint venture with Nippon Steel and the government of Singapore, to be called Hitachi Nippon Steel Semiconductor Singapore Pte. The three partners will invest about $900 million to build a DRAM fab facility in Singapore. Hitachi and Nippon Steel will each have a 35 percent stake in the facility, leaving the remaining 30 percent for the Singapore government. Construction of the facility began in September of 1996. In the second half of 1998, the facility is expected to begin production of 64M DRAMs on 200mm wafers, using a 0.3µm CMOS process.

¥ Added a new 0.5µm CMOS process line at is Landshut, Germany, plant. The new line began production of 16M DRAMs, microprocessors, and microcontrollers in late 1996. The German fab produced its first non-memory devicesÑMCUsÑin December 1995.

Hitachi Ñ Key Agreements

¥ Licensed its H8/300H microprocessor core to Analog Devices for use in ADIÕs GSM chipset and other wireless communications projects.

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Hitachi Ñ Product Briefs

¥ Developed a 32-bit RISC microcontroller with built-in flash memory. The device was designed using a 0.5µm process and integrates an A/D converter, advanced timer functions, and other peripherals on the chip. Sample shipments will begin in February 1997.

¥ Introduced its fourth-generation SH RISC microprocessor, which includes a floating point unit optimized for 3D graphics. Shipments of the SH-4 chip are not expected to begin until mid-1998.

¥ Developed through its partnership with Ramtron, the first 256K ferroelectric RAM (FRAM) device. Manufactured using a submicron process, the device features an industry-standard SRAM-compatible pin-out. The partnership was established in 1992 with the goal of com- bining RamtronÕs ferroelectric memory design with HitachiÕs process technology.

¥ Began sampling an 8M flash memory based on its DINOR architecture developed with flash memory partner, Mitsubishi. Manufactured on a 0.5µm process, the device features 3.3V operation and random access speeds of 80ns. In addition, the two companies developed a 64M flash device based on HitachiÕs AND flash cell technology. The device is manufactured using a 0.4µm process. The alliance between Mitsubishi and Hitachi was established in 1994 for the support of MitsubishiÕs DINOR and HitachiÕs AND-type flash memory architectures.

¥ Introduced its next generation of 64M DRAM devices built with an advanced 0.35µm process. The 3.3V 16M x 4, 8M x 8, and 4M x 16 DRAMs have access times as fast as 60ns.

¥ Rolled out its third generation 32-bit SuperH RISC engine MCUs, the SH-3 family. The initial 45 MIPS SH7702 MCU combines 3.3V operation, speed up to 45MHz, DSP capability, and power efficiency of 90MIPS/watt. The device is manufactured using 0.5µm CMOS technology.

¥ Released a low-voltage 3.3V 16M burst mode mask ROM (MROM) with a x32 organization.

¥ Plans to release a 64M Rambus DRAM in 1997. Hitachi is working with Rambus as part of a technology development agreement.

¥ Withdrew from the pseudostatic RAM (PSRAM) market in 1996.

INTEGRATED CIRCUIT ENGINEERING CORPORATION 2-41 Worldwide IC Vendors

Toshiba Ñ Wafer Fab Announcements

¥ Announced plans to build a 256M DRAM fab facility adjacent to its Oita plant. The facility will be equipped to process 7,500 200mm wafers per week using a 0.25µm process. In addition to 256M DRAMs, the facility will produce ASICs and DSPs. Construction is scheduled to begin in fiscal 1998.

¥ Began operations in a newly constructed cleanroom at its Yokkaichi Works fab facility in Mie Prefecture, Japan. The new line, second at this facility, is equipped for production of 64M DRAMs using 0.35µm CMOS technology. The fab has a capacity of 7,500 200mm wafers per week. Initial production began with 64M DRAMs codeveloped by Toshiba, Siemens, and IBM.

¥ Will invest $1.3 billion in a 0.25µm logic IC fab line at its Iwate site in Japan. Production is scheduled to begin in spring of 1998 with a capacity of 7,500 wafers per week.

Toshiba Ñ Key Agreements

¥ Expanded an existing agreement with Winbond to include licensing and transfer of 64M DRAM technology. Under the new agreement, Toshiba will license its 64M DRAM technology to Winbond, who will produce and supply the devices to Toshiba. The original agreement was made in December 1995 to cover 16M DRAMs and 1M SRAMs. Both companies expect the partnership to include next-generation products such as 256M DRAMs.

¥ Teamed up with Siemens and IBM to develop system-on-a-chip LSIs. The three companies will combine their technologies in an effort to reduce time-to-market and lower development costs.

Toshiba Ñ Product Briefs

¥ Developed a low-power microcontroller with on-board flash memory, targeting engine control and industrial automation applications. The device features an on-board 10-bit A/D converter, operates between 4.5-5.5 volts, and is packaged in a 120-pin quad flat package (QFP). Sample shipping is expected to start in mid-1997.

¥ Introduced what it claims to be the industryÕs first chipset for digital video disk (DVD) players. The chipset is made up of 12 LSI chips and a 16-bit MCU which controls the signal flow of the overall circuit system. Volume production is set to begin in 3Q97.

¥ Began sample shipments of its 4M NOR-type flash memory in September 1996. The device operates at 5V and is optimized for high-speed processing applications.

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¥ Developed two series of ASICs, the TC222 and the TC223, which are manufactured using a 0.3µm CMOS process. The TC222 series is available as a standard cell and features over 2 million usable gates. The TC223 is a mixed-signal family that consists of 1.9 million usable gates and is available as a gate array, standard cell, or embedded array architecture.

¥ Began shipping samples of the Mpact media processor. The processor, jointly designed by Chromatic Research, Inc. and LG Semicon, accelerates 2D and 3D graphics, MPEG-1 and MPEG-2 video, audio, fax/modem, and videoconferencing. Volume production is expected to begin in 2Q97.

¥ Began sample shipments of 64M DRAMs codeveloped with Siemens and IBM, manufactured using 0.35µm CMOS technology. The technology was developed as part of a joint development program created in 1993 by the three companies. The program was initially set for 256M technology, but was later extended to cover 64M technology.

¥ Began shipping samples of its second generation 16M synchronous DRAM (SDRAM) family, which is manufactured with a 0.45µm process technology to achieve a minimum 8ns cycle time.

¥ Introduced a fully integrated single-chip MPEG-2 video and audio decoder IC.

¥ Sampling an 8M Rambus DRAM (RDRAM).

¥ Developed a prototype switching LSI for asynchronous transfer mode (ATM) systems that attains a data exchange speed of 5G/sec. with 8-input/8-output (622Mbps per port).

¥ Rolled out an assortment of 16-bit and 8-bit microcontrollers in 1Q96, which included five additions to the companyÕs TLCS-900L low-power, 16-bit MCU family and four new devices for the TLCS-870 8-bit MCU family, as well as a real-time emulator for both lines.

Toshiba Ñ Other Noteworthy News

¥ Sold its 49 percent stake in Nippon Motorola Microelectronics at the request of Motorola. The two companies still maintain a cooperative relationship with their jointly owned manufacturing venture, Tohoku Semiconductor.

INTEGRATED CIRCUIT ENGINEERING CORPORATION 2-43 Worldwide IC Vendors

Mitsubishi Ñ Key Agreements

¥ Signed an agreement with IBM that allows Mitsubishi to design and market embedded PowerPC microprocessors. Under the agreement, Mitsubishi has access to IBMÕs complete line of PowerPC products, but does not cover the high-performance desktop processors in the 600 series, such as the 604 and 603e.

¥ Transferred its M32R/D microprocessor with embedded DRAM technology to Motorola, in exchange for MotorolaÕs 32-bit ColdFire RISC MPU and 68000 embedded MPU technologies. Mitsubishi will add the ColdFire and 68EC000 cores to its ASIC gate array and embedded- cell libraries. Motorola will offer the M32R/D MPU as a module in its FlexCore program and a macro in its standard-cell library.

Mitsubishi Ñ Product Briefs

¥ Began sampling an 8M flash memory based on its DINOR architecture developed with flash memory partner, Hitachi. Manufactured on a 0.5µm process, the device features 3.3V operation and random access speeds of 80ns. In addition, the two companies developed a 64M flash device based on HitachiÕs AND flash cell technology. The device is manufactured using a 0.4µm process. The alliance between Mitsubishi and Hitachi was established in 1994 for the support of MitsubishiÕs DINOR and HitachiÕs AND-type flash memory architectures.

¥ Introduced a 1M synchronous pipeline burst SRAM for level-two cache applications in Pentium- and PowerPC-based systems with bus clock frequencies of up to 133MHz.

¥ Began sample shipments of its 3.3V and 5V 1M SRAMs, which feature dual center Vcc and ground pin-out design. The dual center Vcc and ground pins reduce noise, support high throughput, and preserve data integrity for high-speed networking and telecommunications applications.

¥ Released its M32R/D 32-bit RISC processor that combines 2K of cache memory, a memory controller, and 16M of DRAM. The processor integrates 17 million transistors, using a 0.45µm double metal CMOS process. It is designed for PDA, set-top box, network controller, and other applications.

¥ Introduced a 3.3V, 0.35µm ASIC with two million usable gates and a gate speed of 101ps.

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Fujitsu Ñ Wafer Fab Announcements

¥ Plans to begin pilot production of 300mm wafers at its R&D center in Akiruno City in late 1998 or early 1999. Future plans include moving the 0.15µm process technology for 300mm wafers to the companyÕs fab in Aizu-Wakamatsu.

¥ Postponed completion of an expansion for DRAM production at its Gresham, Oregon, fab facility. Production of 64M DRAMs, instead of the previously planned 16M DRAMs, is now scheduled for June 1997.

¥ Delayed for six months the construction of a second fab at its Fujitsu-AMD Semiconductor Ltd. joint venture in Japan. The new fab will roughly double the siteÕs wafer capacity. Initial production was originally scheduled to begin in late 1997 at the 0.35µm level with capacity expected to start at 6,000 200mm wafers per week.

Fujitsu Ñ Key Agreements

¥ Revised its partnership with AMD to allow both companies to sell flash memory devices worldwide. In their previous agreement, AMD had exclusive rights to North America, Taiwan, and most of Europe, leaving Japan and United Kingdom exclusively to Fujitsu. The new agreement removes the geographical barriers as well as the difficulty of working with multinational companies.

¥ Signed a long-term agreement with Hyundai that involves joint development and technology licensing. Under the agreement, Hyundai will be licensed to sell FujitsuÕs 16M synchronous DRAMs (SDRAMs). The two companies have also agreed to jointly develop next-generation 64M SDRAMs.

¥ Entered into an FRAM development pact with Ramtron. Upon completion of a feasibility study by the two companies, development of a 1M FRAM is planned to begin, followed by a move toward development of a 16M device. Fujitsu will be entitled to sell FRAMs under its own name and will OEM-supply products to Ramtron.

Fujitsu Ñ Product Briefs

¥ Accelerating its effort to lower DRAM production costs by shrinking the die size of its 64M DRAMs. The company is working on a project that will reduce the die size from 60mm2 using a 0.36µm process to 47mm2 on a newly developed 0.32µm process as early as mid- 1997. Plans to shrink die size to 40mm2 are set for 1998.

INTEGRATED CIRCUIT ENGINEERING CORPORATION 2-45 Worldwide IC Vendors

¥ Announced a new TurboSparc MPU in late 1996, that the company claims will run at 170MHz. It is a follow up to the MicroSparc II architecture.

¥ Dropped its SRAM and EPROM product lines due to extreme price pressures and to con- centrate its memory manufacturing efforts on DRAM and flash products. In addition to dropping product lines, Fujitsu also closed an older, 125mm wafer line at its Iwate facility.

¥ Introduced a 0.35µm CMOS microembedded cell-based array series, dubbed the CE61, which features two million raw gates (45-65 percent usable) in a sea-of-gates architecture, clock speeds of 200MHz, and 3.3V or 5V I/O interfaces.

¥ Introduced its 0.65µm CG46/CE46 CMOS ASIC product family. The CG46 is a digital CMOS gate array and the CE46 is an embedded array. The series features up to 89,000 usable gates in a channelless sea-of-gates architecture.

¥ Released a second generation asynchronous transfer mode (ATM) device as part of a product series of upgraded ATM products. The device was made using FujitsuÕs 0.5µm CMOS process.

Matsushita Ñ Wafer Fab Announcements

¥ Completed construction of a new wafer processing facility at its Tonami plant in Toyama Prefecture. The company started production of 16M DRAM chips at the plant in Spring 1996. In 4Q96, the company announced plans to add a 0.25µm 200mm wafer line to the Tonami plant, to be on-line by October 1997. The company plans to produce 64M DRAMs and 32- bit controllers on the new line.

¥ Began constructing a 0.25µm 200mm wafer fab at its existing Puyallup, Washington, site. The fab is expected to begin production in October 1997.

Matsushita Ñ Key Agreements

¥ Announced it would supply ferroelectric RAMs (FRAMs) to Motorola, which will use them in a new class of IC identity and validation cards. The devices were developed jointly by Matsushita, the University of Colorado, and Symetrix Corporation (Colorado Springs, Colorado). In 4Q96, Matsushita purchased a 10 percent equity position in Symetrix.

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Matsushita Ñ Product Briefs

¥ Developed a 64M NOR-type flash memory chip with U.S.-based SanDisk. The chip was designed using a 0.5µm CMOS process and incorporates SanDiskÕs double-density flash technology. Initial production was to begin in December 1996.

Sanyo Ñ Product Briefs

¥ Developed a technique that it claims doubles the capacity of flash memory devices. The technique enables a flash memory cell to store two bits of data instead of just one. Sample shipments utilizing the new technique began in December 1996.

¥ Began production of a 32M flash memory based on its proprietary memory circuit configuration.

Sharp Ñ Wafer Fab Announcements

¥ Announced its plans to build a $1 billion fab at its Fukuyama facility in Hiroshima that will begin operating in April 1998, making flash and logic ICs. Capacity is expected to be 5,000 200mm wafers per week. The company recently completed the installation of a 0.35µm to 0.4µm process line at the plant in order to expand flash memory and mask ROM production.

Sharp Ñ Key Agreements

¥ Formed a technology alliance with InterConnect Technology, a pure-foundry start-up company in Malaysia. The alliance calls for Sharp to transfer its 0.35µm CMOS process technology to InterConnect, who will supply Sharp with a substantial portion of the new foundryÕs output. Operations are set to begin in 2Q98. When fully ramped, the fab is expected to produce 6,250 wafers per week.

Sharp Ñ Product Briefs

¥ Developed a Òdual-workÓ flash memory that houses two flash chips in a package. Using the structure, the device is able to perform write and erase functions simultaneously.

¥ Developed a 0.4µm process technology for flash memories with Intel. Sharp plans to use the new technology in its Fab 3 and its upcoming Fab 4 in Fukuyama.

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Sony Ñ Key Agreements

¥ Began joint development with Oki on a single-chip application-specific DRAM with embedded core logic using 0.25µm technology.

Sony Ñ Product Briefs

¥ Expanded its MOS logic IC product line to include a series of sound and image processing products for multimedia applications. The new series includes a MPEG-2 chipset for DVD and set-top box use.

Oki Ñ Wafer Fab Announcements

¥ Postponed construction of a planned fab facility in Japan, in response to decreasing market prices. Construction of the 64M and 256M DRAM fab facility was originally scheduled to begin in late 1996.

Oki Ñ Key Agreements

¥ Reached an agreement with MoSys Inc. that allows Oki to sell the high-speed multi-bank DRAMs (MDRAMs) that Oki has been manufacturing for MoSys under a previous agreement.

¥ Began joint development with Sony on a single-chip application-specific DRAM with embedded core logic using 0.25µm technology.

¥ Extended its wafer commitment to Catalyst Semiconductor through early 1998 and agreed to double the number of wafers committed to Catalyst. Oki has been CatalystÕs primary source of wafers for the past decade.

Oki Ñ Product Briefs

¥ Entered the Ethernet market with the introduction of a 100Base-T media-access controller featuring dual-speed operation of 100Mbits per second and 10Mbits per second, and a media-independent interface.

¥ Introduced a second-generation series of 0.5µm ASICs that offer a 60 percent increase in gate density over the first-generation devices and a 5V-tolerant 3V buffer. The new ASICs feature up to 724,000 usable gates and two- or three-layer-metal options.

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EUROPEAN IC VENDORS

Figure 2-29 displays IC sales for the leading European IC companies in 1995 and 1996. As a group, sales by these companies grew 10 percent in 1996, following 37 percent growth in the previous year. The growth was driven primarily by fast-growing demand for digital mobile phones and other telecommunications equipment, and automotive electronics.

1995 1996/1995 1996 (EST) 1996 Company Percent Rank MOS Bipolar Total Change MOS Bipolar Total

1 SGS-Thomson1 1,844 1,120 2,964 21 2,945 645 3,590 2 Philips1 2,711 225 2,936 10 3,015 200 3,215 3 Siemens 2,047 335 2,382 1 2,080 320 2,400 4 TEMIC 270 145 415 6 290 150 440 Telefunken 31 145 176 5 35 150 185 Matra MHS1 145 — 145 3 150 — 150 Siliconix 64 — 64 17 75 — 75 Dialog2 30 — 30 0 30 — 30 5 Ericsson 300 — 300 8 325 — 325 6 GEC Plessey 165 185 350 Ð13 128 177 305 7 Robert Bosch1,3 30 210 240 6 35 220 255 8 Alcatel Mietec 195 — 195 8 210 — 210 9 ITT Semiconductors 127 16 143 45 197 10 207 10 Austria Mikro Systeme 175 — 175 14 200 — 200 11 EM Microelectronic 84 — 84 13 95 — 95 12 Thesys Microelectronics 60 — 60 — 60 — 60 13 ZMD 50 — 50 10 55 — 55 14 SMI — 45 45 11 — 50 50 14 Micronas1 46 — 46 9 50 — 50 14 Newport Wafer Fab 40 — 40 25 50 — 50 15 Melexis 34 — 34 32 45 — 45 Others 116 20 136 Ð17 98 15 113 Total 8,294 2,301 10,595 10 9,878 1,787 11,665

1BiCMOS ICs included under MOS. 2Fabless IC supplier. 3Captive IC manufacturer. Source: ICE, "Status 1997" 11064AB

Figure 2-29. European CompaniesÕ IC Sales ($M)

SGS-Thomson is focusing mostly on high-growth applications and on high-margin productsÑ particularly emphasizing areas such as multimedia, mobile phones, computers, and automotive electronics. Its strongest performing IC products in 1996 were EEPROMs, analog and mixed- signal ICs, MCUs, and standard cell ASICs.

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Having survived a couple of years of heavy restructuring, Philips Semiconductors is now in a much better position to compete with the world leaders in the IC industry. Philips is working hard to be among the worldÕs top ten semiconductor companies in the near future. The company aims to maintain its dominant position in consumer electronics-related products, while becoming an established leader in the digital communications and multimedia markets. The company has, therefore, chosen microcontrollers and standard high-performance logic devices as two areas of focus. Philips is already among the leaders in 8-bit MCUs, and it intends to become an equally serious player in 16-bit parts.

SiemensÕ IC group focuses on four strategic product areas: memories, microcontrollers, chip cards, and communications ICs. As EuropeÕs only DRAM producer, the company plans to be among the top ten DRAM leaders in the world within the next few years; it is currently within the top 15. SiemensÕ efforts in microcontrollers are targeted at applications in the industrial and automotive markets. In communications ICs, the company claims to be the second largest supplier after Lucent Technologies.

Top Ten European Vendor Highlights

SGS-Thomson Ñ Wafer Fab Announcements

¥ Began construction of a new submicron wafer fab facility in Singapore. The new plant will be located at its existing fab site at Ang Mo Kio Industrial Estate. The new unit, called Ang Mo Kio 8, will produce 5,000 200mm wafers per week with geometries starting at 0.5µm in BiCMOS and CMOS technologies. Production is scheduled to begin in late 1998.

¥ Plans to open one 200mm IC fab each year between 1996 and 2000.

SGS-Thomson Ñ Key Agreements

¥ Worked with Oak Technology to develop a chipset that meets the proposed Audio Codec Ô97 (AC97) standards for multimedia ICs. The specification was developed to create a standard for high-quality audio solutions for PCI motherboards and add-in cards.

¥ Licensed the Mpact technology from Chromatic Research Inc. SGS-Thomson began sampling Mpact 3000 mediaprocessor chips in November 1996.

¥ Licensed its smartcard technology to Hyundai, which plans to incorporate the CMOS technology into its advanced fab facilities.

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¥ Penned a joint development agreement with Applied Materials. The agreement covers development of processing techniques for several devices structures, including advanced interconnect and shallow trench isolation modules for STÕs multilevel metal CMOS designs. The agreement is an extension of an existing alliance between the two companies that involves codevelopment of 0.25µm process technology.

¥ Licensed its DSP core technology to Samsung as part of a second-source and development agreement. The deal included rights to SGS-ThomsonÕs D950 16-bit fixed-point DSP core and a second-sourcing pact for ASICs based on the core. In early 1996, the alliance was extended, giving Samsung a license to design and manufacture products based on SGS- ThomsonÕs ST20 32-bit microcontroller core, specifically designed for high-volume embedded control applications.

SGS-Thomson Ñ Product Briefs

¥ Introduced what it claims to be the densest non-volatile serial EEPROMs featuring densities up to 128K and 256K. The devices are manufactured using 0.6µm technology and are the first products in a series of high-density, double poly EEPROM ÒEagle RangeÓ devices.

¥ Processed its first wafers using a 0.25µm process technology (0.20µm effective), which was co-developed with France Telecom-CNET. The process will be used in manufacturing what ST calls Òsuper-integratedÓ ICs for applications ranging from computers to digital mobile phones and entertainment systems. Production of customer-designed devices will begin in 2Q97.

¥ Announced its latest flash memory product called SuperFlash. The device uses a double polysilicon structure, featuring a single power supply, and is based on a 0.6µm process.

¥ Planned to begin selling the Cyrix-designed 6x86 in late 1996, as part of a second-source agreement with Cyrix Corporation.

¥ Introduced a chipset that integrates the digital and data conversion functions of a set-top box into just five devices.

¥ Announced a 486DX ASIC core that can be used in conjunction with a high performance semicustom standard cell technology and a comprehensive library of functions. The 486 core is based on a high-speed, low voltage, 0.35µm, five-layer metal HCMOS process.

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Philips Ñ Wafer Fab Announcements

¥ Opened its largest fab facility in Nijmegen, The Netherlands. The new facility, named MOS4YOU (Yield Output Utilization), is processing 200mm wafers using 0.5µm process technology, with plans to switch to a 0.35µm process in 1998. The facility uses a class 0.1 mini-environment system, with a majority of the production area only needing to be Class 100.

Philips Ñ Key Agreements

¥ Disclosed a wafer sourcing agreement with TriQuint Semiconductor, under which Philips will develop GaAs ICs at a facility in Limeil, France, and TriQuint will produce the wafers.

Philips Ñ Product Briefs

¥ Introduced two high-speed, high-accuracy, low-power analog-to-digital converters targeting wireless communications, digital cable TV, and medical imaging equipment applications.

¥ Developed a version of the TriMedia processor, code-named TM-MS, that is designed for Microsoft CorpÕs Talisman architecture. The TM-MS will combine the functions of its TriMedia chip with its new 2D/3D graphics chips (to be released separately in early 1997). TM-MS chips are expected to be available in the later half of 1997.

¥ Announced the industryÕs first 2.5V logic family (the ALVT family), featuring backward compatibility, high speed, and mixed-mode I/O operation up to 5V. TI will be an alternate source for the ALVT product family. In addition, Philips will be a second-source for TIÕs new advanced high speed CMOS logic family. These second-sourcing agreements are part of an alliance between Philips and TI that started in the early 1980Õs.

¥ Began sampling the XA-G3 microcontroller, which is the first device built around the 16-bit XA architecture.

Philips Ñ Other Noteworthy News

¥ Shut down the graphics-board business unit that it acquired from Western Digital. It will however, keep the 2D/3D graphics-IC business unit that it also received through the acquisition.

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¥ Formed a new business unit and strategy to develop and market 3.3V CPLDs for low-power and high-speed applications. For CPLD development, Philips will use its XPLA architecture, which combines PLDs and PALs on one device and a fast zero power (FZP) design technique, resulting in low static and dynamic power.

Siemens Ñ Wafer Fab Announcements

¥ Began production of 16M DRAM chips at its Dresden, Germany, plant. The plant is expected to eventually process over 7,500 200mm wafers per week, using 0.25µm technology.

¥ Plans to build a second joint venture fab with Motorola. The future facility is to be located in Dresden, Germany, and will process 300mm wafers. The two partners have yet to draft a timetable for the plant.

Siemens Ñ Key Agreements

¥ Formed a joint venture company with Mosel-Vitelic that will manufacture advanced high- density DRAMs, beginning with 64M devices. The new company, called ProMOS Technologies, Inc., will be headquartered in Hsinchu, Taiwan. Production is set to begin in mid-1997. Siemens will hold a 38 percent share while Mosel-Vitelic will hold the remaining 62 percent. The total venture investment is estimated to be $1.7 billion.

¥ Teamed up with Toshiba and IBM to develop system-on-a-chip LSIs. The three companies will combine their technologies in an effort to reduce time-to-market and lower development costs.

¥ Extended its wireless technology development and licensing pact with Samsung to include InterDigital Communications Corporation. The alliance aims to create a broadband CDMA (B-CDMA) digital wireless local loop product and establish the technology as a standard for wireless personal computer systems (PCS) networks.

Siemens Ñ Product Briefs

¥ Began development of synchronous graphic DRAMs and other specialty memories in 4Q96. The company cited a lower demand for its multibank DRAM (MDRAM), which it licensed from MoSys, as its reason to expand into specialty memory products.

¥ Announced a multimedia controller aimed at board-level and system manufacturers. The chip was jointly developed by Siemens and Zoran Corporation.

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¥ Released a 16-bit CMOS single-chip controller that integrates 32K of flexible memory for code storage. The device is based on SiemensÕ C166 core technology.

¥ Announced a new solid-state memory chip technology that enables the creation of a multimedia card offering with 16M or 64M of ROM. The new record-on-silicon (ROS) chip is a ROM component that is embedded onto a MultiMediaCard.

TEMIC Ñ Key Agreements

¥ Formed an SRAM technology licensing and wafer foundry relationship with Ramax Semiconductor. Under the agreement, Ramax will license its SRAM process and designs to TEMIC subsidiary, Matra MHS, and in exchange, Ramax will receive wafer capacity for production of SRAMs at MHSÕs Nantes, France, fab facility.

TEMIC Ñ Other Noteworthy News

¥ Restructured its semiconductor unit into two product divisions, discrete components, located in Santa Clara, California, and ICs (including power semiconductors), located in Heilbronn, Germany. The restructuring is part of an effort to address the special market requirements in each area.

GEC Plessey Ñ Wafer Fab Announcements

¥ Invested $160 million to expand its Roborough, Plymouth, CMOS fab. The fabÕs cleanroom size is now approximately 29,000 square feet.

GEC Plessey Ñ Product Briefs

¥ Planned to sample devices based on a 0.35µm silicon germanium (SiGe) process by the end of 1996 with production scheduled for 1998.

¥ Unveiled a single-chip radio frequency (RF) device for keyless entry, remote control, and other low-power systems.

ITT Ñ Product Briefs

¥ Introduced a single-chip DSP chip for use in TV and satellite receivers, video recorders, and PC sound cards.

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Austria Mikro Systeme Ñ Product Briefs

¥ Introduced a 5V, double-metal, single-polysilicon layered, 0.6µm process designed for digital circuits.

REST-OF-WORLD (ROW) IC VENDORS

Many ROW nations have in recent years undertaken major efforts to establish competitive semiconductor industries. This has especially been the case for the rapidly developing countries in the Asia-Pacific region (excluding Japan). One of the main driving forces behind these efforts is the desire many of these countries have to build self-contained electronics industries.

Korean IC Vendors

Korea has grown into a memory chip manufacturing powerhouse in a very short time. Aided by strong demand for DRAMs through 1995, the three main Korean companiesÑSamsung, LG Semicon, and HyundaiÑexperienced 90 percent growth in their sales of ICs in 1995. Unfortunately, that performance could not be repeated in 1996 because of the plunge in DRAM prices. Overall, the three top companies experienced a 30 percent decline in IC sales for the year (Figure 2-30).

1995 1996/1995 1996 (EST) Rank Company Percent MOS Bipolar Total Change MOS Bipolar Total

1 Samsung1 8,183 — 8,183 Ð29 5,800 — 5,800

2 Hyundai 4,350 — 4,350 Ð28 3,150 — 3,150

3 LG Semicon 3,500 100 3,600 Ð33 2,300 100 2,400

— Others 337 — 337 4 350 — 350

Total 16,370 100 16,470 Ð29 11,600 100 11,700

1GaAs ICs included under MOS. Source: ICE, "Status 1997" 11725AA

Figure 2-30. Korean CompaniesÕ IC Sales ($M)

DRAMs accounted for more than 80 percent of their IC sales in 1995. The Koreans are working to lessen their dependence on DRAMs through alliances with and investments in companies that have strengths in other areas. A prime example is HyundaiÕs 1995 purchase of NCR Microelectronic Products from AT&T Corporation. Now called Symbios Logic, the business gives Hyundai a strong presence in the North American ASIC and ASSP markets.

INTEGRATED CIRCUIT ENGINEERING CORPORATION 2-55 Worldwide IC Vendors

Korean Vendor Highlights

Samsung Ñ Wafer Fab Announcements

¥ Building a $1.3 billion fab facility in Austin, Texas. Construction of the facility, called Samsung Austin Semiconductor, began in 1Q96 and is expected to be operational by 1Q98. The plant will be used to manufacture 16M and 64M DRAM devices, using 0.35-0.3µm technology on 200mm wafers.

Samsung Ñ Key Agreements

¥ Extended its technology license agreement with Advanced RISC Machines Ltd. (ARM). Through the extension, Samsung gained a license for the ARM7TDMI ÒThumbÓ RISC processor core. Samsung will use the newly licensed technology to complete its microcontroller product offerings.

¥ Established separate agreements with Trident Microsystems and Chips and Technologies with the goal of integrating its merged memory logic (MML) technology with each of the two companiesÕ ASIC devices. With Trident, Samsung will develop a next-generation notebook multimedia accelerator featuring SamsungÕs embedded SDRAM. Under the agreement with Chips, Samsung will pair Chips graphics and video controllers with DRAM in a product to be manufactured on SamsungÕs 0.35µm CMOS multilayer ASIC process. Sampling of these products could begin as early as 2Q97.

¥ Signed a 10-year cross-licensing agreement with Texas Instruments, ending a long period of litigation between the two companies. The agreement replaces a previous five-year licensing agreement that expired in December 1995.

¥ Licensed the PineDSPCore engine from DSP Group. Samsung will incorporate the 16-bit, general purpose, low-power, low-voltage, and high-speed engine in its ASIC library for 0.6µm- and 0.5µm-based multimedia and communications products.

¥ Forged an alliance with Digital Equipment Corporation under which Samsung became a licensed alternate source manufacturer of current and future implementations of DigitalÕs high-performance Alpha 64-bit RISC microprocessors. It is expected that Samsung will produce its first Alpha chips in 1997. The two companies will also work together on development projects related to the Alpha microprocessor family.

¥ Released a newer enhanced version of its 32M NAND-based flash memory. The device is based on a 0.5µm CMOS process.

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¥ Extended its wireless technology development and licensing pact with Siemens to include InterDigital Communications Corporation. The alliance aims to create a broadband CDMA (B-CDMA) digital wireless local loop product and establish the technology as a standard for wireless PCS networks.

¥ Signed a technology and product development agreement with NEC in the ASIC field. NEC agreed to provide microcontroller technology to Samsung, who will make NEC- specified MCUs and develop ASICs based on the MCU cores. Samsung also strengthened its alliance with NEC by agreeing to work together to improve production efficiency at both companies and to exchange highly sensitive information on manufacturing yields and processing techniques.

¥ Licensed DSP core technology from SGS-Thomson as part of a second-source and development agreement. The deal included rights to SGS-ThomsonÕs D950 16-bit fixed-point DSP core and a second-sourcing pact for ASICs based on the core. In early 1996, Samsung and SGS-Thomson extended their alliance to include a license to design and manufacture products based on SGS-ThomsonÕs ST20 32-bit microcontroller core, specifically designed for high-volume embedded control applications.

Samsung Ñ Product Briefs

¥ Introduced what it claims to be the fastest 4M EDO DRAM. The new family features access times of 35ns, 40ns, and 45ns.

¥ Announced its first cell-based ASIC family that includes up to 1M of on-chip DRAM. The first-generation device, the EDL60, combines up to 1M of EDO DRAM with up to 60,000 gates of random CMOS logic. Second-generation devices are expected in early 1997 offering 4M of DRAM with 100,000 gates. Future generations are expected to feature 400K gates with 16M of embedded DRAM.

¥ Targeting the PC OEMs and consumer electronics manufacturers, Samsung unveiled a multimedia system-on-a-chip. Referred to as the multimedia signal processor (MSP), the device will be released in 1Q97. The MSP incorporates analog-to-digital and digital-to-analog converters, memory, and digital signal processing all on a single chip.

¥ Plans to introduce its first NOR flash memory in Spring 1997, in an effort to compete in the NOR-based flash market. Samsung also plans to release a new flash type device referred to as DRAM-interface flash. Based on its NAND technology, these devices will have the same form fit and pin configuration as a standard 16M DRAM.

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¥ Introduced its first synchronous graphics RAM (SGRAM), an 8M part organized as 256K x 32.

¥ Completed a prototype circuit design for a 1G synchronous DRAM, samples of which the company says could appear as early as 1997. The 500mm2 IC is based on a 0.16µm process.

¥ Introduced a microcontroller for the laser printer market based on the ARM RISC microprocessor core. The microcontroller was one of several such 32-bit devices that Samsung introduced in 1996.

Hyundai Ñ Wafer Fab Announcements

¥ Announced plans to invest $3.6 billion to build two fab facilities in Dumfermline, Scotland. The first fab will produce 64M DRAMs, later moving to 256M DRAMs, on 200mm wafers. The first fab is expected to be operational by late 1998.

Hyundai Ñ Key Agreements

¥ Formed a long-term partnership with Fujitsu in November 1996. As part of the alliance, Hyundai will be licensed to sell FujitsuÕs 16M synchronous DRAMs (SDRAMs). The partnership also includes joint development of next-generation 64M SDRAMs.

¥ Licensed RambusÕ technology to develop 16M and 64M Rambus DRAMs (RDRAMs).

¥ Licensed SGS-ThomsonÕs smartcard technology, with plans to incorporate the technology into its own fab facilities.

¥ Formed an alliance with Compass Design and Symbios Logic to develop 0.35µm five-layer- metal CMOS technology for ASIC devices.

¥ Signed a patent cross-license and limited technology transfer agreement with Intel that covers all of HyundaiÕs IC patents and all but IntelÕs microprocessor patents.

Hyundai Ñ Product Briefs

¥ Began shipping its 16M SDRAMs. Available in three configurations, 1Mx16 bit, 4Mx4 bit, 2Mx8 bit, the devices support clock frequencies from 66-100MHz.

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Hyundai Ñ Other Noteworthy News

¥ Settled its dispute with AMD over flash memory trade secrets. In early 1996, five former AMD employees were prohibited from performing certain job duties at Hyundai that AMD claimed could have compromised itÕs flash memory design techniques. Details of the settle- ment were not known at the time of this writing.

LG Semicon Ñ Wafer Fab Announcements

¥ Announced plans to build its first fab facility outside of Korea. The facility, to be located in Newport, South Wales, will be used for 64M and 256M DRAM production and assembly, starting in late 1998.

LG Semicon Ñ Key Agreements

¥ Negotiating an agreement with Hitachi concerning the transfer of HitachiÕs 32-bit SH family RISC MPU technology to LG Semicon.

¥ Established a manufacturing and technology licensing agreement with Crosspoint Solutions, under which LG Semicon will provide Crosspoint two and three-layer metal 0.8µm and 0.6µm process manufacturing capacity. LG Semicon will receive license rights to develop and market products using CrosspointÕs CP20K FPGA technology.

¥ Signed a patent cross-license agreement with Standard Microsystems Corporation (SMC), regarding SMCÕs digital data separators and LG SemiconÕs Prime 3C Super I/O devices.

LG Semicon Ñ Product Briefs

¥ Began shipping samples of the Mpact media processor. The processor, jointly designed by Chromatic Research, Inc. and Toshiba, accelerates 2D and 3D graphics, MPEG-1 and MPEG- 2 video, audio, fax/modem, and videoconferencing. Volume production is expected to begin in 2Q97.

¥ Announced the availability of a new 8M Rambus DRAM. The RDRAMs are bundled with a graphics controller, which includes a Rambus ASIC cell that supports the interface to the RDRAMs.

¥ Introduced a 64M mask ROM, designed using 0.4µm CMOS technology.

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Taiwanese IC Vendors

In the matter of only a few years, several Taiwanese companies have grown to become significant players in the worldwide IC industry. The Taiwanese companies did well in 1996, with the exception of UMC, Winbond, TI-Acer, and Mosel-Vitelic, who were affected by memory IC pricing pressures. As a result, these four companies brought down the 1996 sales level by three percent, compared to 61 percent growth in 1995 (Figure 2-31).

1996/1995 1996 1996 Company 1995 Percent Rank (EST) Change 1 TSMC 1,105 1,400 27 2 UMC 900 840 Ð7 3 Winbond 676 450 Ð33 4 Macronix 328 410 25 5 TI-Acer 556 400 Ð28 6 Mosel-Vitelic 540 375 Ð31 7 Hualon 125 150 20 8 Acer Labs* 95 110 16 9 Holtek 90 100 11 Others 262 300 15 Total 4,677 4,535 Ð3 *Fabless Supplier Source: ICE, "Status 1997" 17717M

Figure 2-31. Taiwanese CompaniesÕ IC Sales ($M)

A good portion of TaiwanÕs IC industry consists of foundry services. The countryÕs two largest IC firms, TSMC and UMC, are entirely dedicated to foundry work (UMC spun off its standard IC product groups into separate businesses during 1996). Meanwhile, Winbond, the third largest firms, has dedicated more space and funding to increase its foundry capabilities.

Aside from foundry work, IC production in Taiwan is largely focused on lower-margin products such as PC chipsets, EPROMs, ROMs, and SRAMs. However, with backing from a pro-technology government and through partnerships with foreign IC firms, the Taiwanese are shifting their product mixes to more advanced devices like DRAMs, MPUs, flash memories, multimedia ICs, and communications ICs. Although the DRAM is expected to become TaiwanÕs industry driver, it is not expected to dominate as it does in Korea.

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Taiwanese Vendor Highlights

TSMC Ñ Wafer Fab Announcements

¥ Chose Camas, Washington, for the location of its first off-shore wafer fab, called WaferTech. Construction of the $1.2 billion fab began in June 1996 with production scheduled to start in 2Q98. Initial capacity of 0.35µm 200mm wafers is expected to begin at 7,500 wafers per week. The Camas facility will be a joint venture between TSMC, Altera, Analog Devices, and Integrated Silicon Solution Inc.

¥ Completed construction of its Fab 4 in Hsinchu, Taiwan. The facility will begin production of 200mm 0.35µm wafers in 1997.

¥ Began construction of Fab 5, its third 200mm wafer fab in Hsinchu, which is expected to come on line in April 1997. The factory is expected to produce 6,250 wafers per week with 0.5µm and 0.35µm feature sizes.

TSMC Ñ Key Agreements

¥ Signed an agreement with QuickLogic in 4Q96. As part of the agreement, TSMC will install QuickLogicÕs amorphous-silicon antifuse FPGA technology into its 0.5µm, three-layer-metal CMOS process. In return, QuickLogic is guaranteed a supply of the produced wafers as well as access to TSMCÕs upcoming 0.35µm process.

UMC Ñ Key Agreements

¥ Disclosed a foundry and technology agreement with Catalyst Semiconductor. As part of the agreement, UMC will supply Catalyst with wafer capacity for flash memory products in exchange for a 10 percent equity investment in Catalyst. The two companies will also work together on the development of 0.5µm and 0.35µm process technology geared for memory products.

¥ Announced plans for several independent foundries it will build in Taiwan with various partners (Figure 2-32).

UMC Ñ Product Briefs

¥ Stopped making, selling, and using its version of the 486 microprocessor in January 1996 in order to settle a legal dispute with Intel.

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Foundry Name and Production Wafer Size Capacity Partners Location Start Date United Semiconductor 200mm 6,250 wafers per week 3Q96 Alliance Semiconductor and S3 Corporation (USC) Hsinchu, Taiwan

United Silicon Inc. (USI) 200mm 6,250 wafers per week 1Q98 Includes Xilinx, Cirrus Logic, and Alliance Hsinchu, Taiwan Semiconductor

United Integrated Circuits 200mm 6,250 wafers per week mid-1997 Lattice Semiconductor, Oak Technology, Corporation (UICC) Trident, ATI Technologies, OPTi, and ISSI Hsinchu, Taiwan

Source: ICE, "Status 1997" 21208A

Figure 2-32. UMCÕs Trio of Joint-Venture Fabs

UMC Ñ Other Noteworthy News

¥ Spinning off its standard IC product lines, turning itself into a pure foundry company. Its two new U.S.-based subsidiaries, Davicom Semiconductor Corp. and Integrated Technology Express, Inc. will develop and market communications ICs and PC chipsets, respectively. Its last product groups, memory and consumer-electronic IC products, are being divided into two separate subsidiaries to be located in Asia.

Winbond Ñ Wafer Fab Announcements

¥ Delayed volume production at its newly constructed fab facility in Hsinchu, Taiwan due to fire damage. The fire caused about $44 million worth of damage. Volume production was originally scheduled to begin in 1Q97 but may not begin until 3Q97 or 4Q97. The 200mm wafer fab was in pilot production of SRAMs and flash memories.

Winbond Ñ Key Agreements

¥ Expanded an existing agreement with Toshiba to include licensing and transfer of 64M DRAM technology. Under the new agreement, Toshiba will license its 64M DRAM technology to Winbond, who will produce and supply the devices to Toshiba. The original agreement was made in December 1995 to cover 16M DRAMs and 1M SRAMs. Both companies expect the partnership to include next-generation products such as 256M DRAMs.

Winbond Ñ Product Briefs

¥ Entered the MPEG-2 market with a family of products designed for use in PC applications, set-top boxes, and digital video disk players. The first product in the family is a single-chip decoder, which uses a pair of proprietary RISC coprocessor devices to support its audio and video functions.

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Macronix International Ñ Product Briefs

¥ Entered the ASIC and system-on-a-chip market with the introduction of its first family of ASIC-like single-chip products. Designed for CD-ROM drives, its first product includes an 8051-compatible controller with embedded flash memory and DSP-like functionality.

¥ Introduced a 64-bit video/graphics accelerator, the first in a new family of graphics controllers.

TI-Acer Ñ Wafer Fab Announcements

¥ Announced that it will delay the expansion of its fab facility in Taiwan due to the slowdown of the memory market. The expansion was originally expected to begin production in January of 1997, but has been delayed until March of that same year.

Mosel-Vitelic Ñ Key Agreements

¥ Formed a joint venture company with Siemens that will manufacture advanced high-density DRAMs, beginning with 64M devices. The new company, called ProMOS Technologies, Inc., will be headquartered in Hsinchu, Taiwan. Production is set to begin in mid-1997. Siemens will hold a 38 percent share while Mosel-Vitelic will hold the remaining 62 percent. The total venture investment is estimated to be $1.7 billion.

Mosel-Vitelic Ñ Product Briefs

¥ Introduced a fast extended-data-out (EDO) DRAM aimed at the peripheral-card market.

¥ Released a graphics-specific 2M DRAM.

Mosel-Vitelic Ñ Other Noteworthy News

¥ Sold a 51 percent share in its Hong Kong-based semiconductor fab to Win Win International Holdings Ltd. for $6.7 million.

Singaporean IC Vendors

The semiconductor industry is an increasingly important part of SingaporeÕs electronics infra- structure. Assembly, packaging, and testing remain the primary activities of semiconductor manufacturing in Singapore, but investment in front-end device fabrication is rising substantially. Singapore wants to duplicate the success of TaiwanÕs semiconductor industry.

INTEGRATED CIRCUIT ENGINEERING CORPORATION 2-63 Worldwide IC Vendors

Figure 2-33 shows sales for SingaporeÕs few IC companies in 1996. Like TaiwanÕs TSMC, Chartered Semiconductor Manufacturing is having success at focusing all its efforts on providing advanced silicon foundry services to other IC companies. TriTech Microelectronics, a designer and supplier of ICs for the communications and consumer markets, was split off from Chartered Semiconductor in 1990. TECH Semiconductor is a joint venture between Texas Instruments, Canon, Hewlett-Packard, and the local government.

1996 1996/1995 Company 1995 (EST) Percent Change

TECH Semiconductor 620 450 Ð27

Chartered Semiconductor 285 360 26

TriTech Microelectronics* 75 75 — Total 980 885 Ð10 *Fabless Supplier Source: ICE, "Status 1997" 18959E

Figure 2-33. Singaporean CompaniesÕ IC Sales ($M)

Singaporean Vendor Highlights

Chartered Semiconductor Ñ Wafer Fab Announcements

¥ Announced its intentions to set up its first overseas wafer fabrication facility within three years. The company is evaluating China, Malaysia, Thailand, Taiwan, Europe, and the United States as potential locations.

Chartered Semiconductor Ñ Key Agreements

¥ Established a technical and marketing agreement with Excellent Design Inc. Under the agreement, Chartered will supply Excellent with design rules, Spice models, and process data that Excellent will use to create the methodology and tools to produce libraries optimized for CharteredÕs deep-submicron processes. The agreement will last three years and will cover all the technologies Chartered intends to develop during that period. Chartered also signed a similar agreement with Aspec Technology.

TriTech Microelectronics Ñ Product Briefs

¥ Entered the North American wireless communications market with the introduction of three new products, including a voice storage processor, a caller ID chip, and a pen-input processor. The company is also planning to enter into the 3D graphics market in the future.

2-64 INTEGRATED CIRCUIT ENGINEERING CORPORATION Worldwide IC Vendors

SEMICONDUCTOR CAPITAL SPENDING TRENDS

Overview

Attempting to keep up with what seemed to be unstoppable growth in demand for semiconductors, many device manufacturers were spending heavily to increase wafer capacity. Total semiconductor capital spending in 1995 increased a staggering 74 percent! That was by far the highest growth rate in the past decade.

Capital spending for 1996, however, painted an entirely different picture. As shown in Figure 2-34, the growth rate for capital spending in 1996 is estimated to have slowed to five percent. For 1997, semiconductor capital spending is forecast to decrease five percent from the 1996 level.

45,000 41,848 5% Ð5% 40,000 39,710 39,600

35,000 74% 30,000

25,000 22,805

20,000 48% Millions of Dollars 15,385 15,000 35% 12,645 Ð10% 11,375 10,000

5,000

0 1991 1992 1993 1994 1995 1996 1997 (EST) (FCST) Year Source: ICE, "Status 1997" 19246G

Figure 2-34. Worldwide Merchant Semiconductor Capital Spending Trends

The majority of the spending cutbacks in 1996 were for DRAM production facilities. Spending on foundry-dedicated fabs continues to be substantial. Figure 2-35 lists several foundry-dedicated operations that are being set up around the globe. Note that the majority of these fab sites are located in the Asia-Pacific region.

INTEGRATED CIRCUIT ENGINEERING CORPORATION 2-65 Worldwide IC Vendors

Start of Company Location Production Advanced Semiconductor Shanghai, China 1996 Manufacturing Corp. Asian Semiconductor Hsinchu, Taiwan 1996 Manufacturing Co. Chartered Semiconductor Singapore 1997 Manufacturing Co. GMT Microelectronics Valley Forge, Pennsylvania 1996 Huajing Electronics Wuxi, China 1996 Interconnect Technology Sarawak, Malaysia 1997 Lien Hsing Integrated Hsinchu, Taiwan 1996 Circuits Co. Mid-West Microelectronics Lee's Summit, Missouri 1996 Newport Wafer Fab Wales, United Kingdom 1998 Seaway Semiconductor Inc. Livermore, California 1997 Silicon Valley San Jose, California 1997 Semiconductor Corp. Submicron Technology Bangkok, Thailand 1997 Tower Semiconductor Migdal Haemek, Israel 1998 Taiwan Semiconductor Hsinchu, Taiwan 1996 Manufacturing Co. Taiwan Semiconductor Hsinchu, Taiwan 1997 Manufacturing Co. Taiwan Semiconductor Camas, Washington 1998 Manufacturing Co. (WaferTech) United Integrated Circuits Hsinchu, Taiwan 1997 Corp. United Semiconductor Corp. Hsinchu, Taiwan 1996 United Silicon Inc. Hsinchu, Taiwan 1998

Source: ICE, "Status 1997" 20460B

Figure 2-35. New Foundry Facilities are Popping up Everywhere

The estimated 1996 worldwide top ten spenders are ranked in Figure 2-36. For the sixth year in a row Intel was the largest spender in the semiconductor industry. The top three Korean companies have established a significant presence among the top ten worldwide spenders. LG Semicon and Hyundai were the next biggest spenders, both spending $2.5 billion. Samsung first appeared in the top ten list in 1991 and currently holds the third position. Although no European company is on the top ten list, SiemensÕ capital expenditures are estimated to have increased by 53 percent in 1996 to $1.3 billion, making it the eleventh largest spender.

Figure 2-37 shows the annual capital spending levels by world region from 1991 to 1996. North America continues to be the largest spending region. Since 1995, ROW companies (excluding those in Korea) have spent more than European companies. More significantly, combined expenditures for Korean and ROW companies in 1996 is estimated to have exceeded that of Japanese companies and was not too far behind that of North American companies.

2-66 INTEGRATED CIRCUIT ENGINEERING CORPORATION Worldwide IC Vendors

1996 Spending 1996 Capital 1996/1995 Headquarters as a Percent of Rank Company Spending Percent Location Semiconductor ($M, EST) Change Sales 1 Intel U.S. 3,600 6 20 2 LG Semicon Korea 2,500 19 104 2 Hyundai Korea 2,500 19 79 3 Samsung Korea 2,000 Ð9 33 4 TI U.S. 1,800 57 27 5 NEC Japan 1,700 Ð15 17 6 Toshiba Japan 1,560 1 18 7 IBM U.S. 1,500 50 29 8 Fujitsu Japan 1,435 Ð5 39 9 Hitachi Japan 1,380 Ð21 17 Total 19,975 6 28 109´ = $1.00 Source: ICE, "Status 1997" 19820D

Figure 2-36. Worldwide Top Ten 1996 Semiconductor Capital Spenders

NORTH AMERICA JAPAN EUROPE

16,000 12,000 11,580 11,135 4,000 14,015 14,490 3,528 14,000 Ð4% 3,500 3,350 3% 10,000 5% 12,000 3,000 8,000 7,345 10,000 9,020 58% 2,500 6,280 55% 2,040 8,000 2,000 6,400 6,000 4,925 64% 3,925 6,000 41% 1,500 1,385 4,295 4,000 49% 1,160 47% 3,520 Ð38% 25% 1,000 4,000 49% 1,000 19% Millions of Dollars Millions of Dollars 22% Millions of Dollars 16% 2,000 2,000 500 0 0 0 1991 1992 1993 1994 1995 1996 1991 1992 1993 1994 1995 1996 1991 1992 1993 1994 1995 1996 (EST) (EST) (EST) Year Year Year

KOREA ROW

8,000 7,250 6,000 5,445 7,000 6,575 5,000 10% 6,000 4,190 4,000 30% 5,000 179% 105% 4,000 3,000 2,040 3,000 2,360 2,000 100% 2,000 1,660 Millions of Dollars Millions of Dollars 1,015 1,060 1,195 42% 1,000 785 800 1,000 13% 39% 2% 27% 0 0 1991 1992 1993 1994 1995 1996 1991 1992 1993 1994 1995 1996 Year (EST) Year (EST)

Source: ICE, "Status 1997" 17875L

Figure 2-37. Capital Spending by Region

INTEGRATED CIRCUIT ENGINEERING CORPORATION 2-67 Worldwide IC Vendors

Figure 2-38 shows how dramatically the regional share of spending has changed since 1991. As shown, Japanese companies were once responsible for about half of the semiconductor industryÕs capital expenditures. That was before JapanÕs economy collapsed in 1992, causing the Japanese producers to slash their budgets substantially. In the years since, Japan has seen its share of the worldÕs capital spending shrink to less than one third, even despite healthy investment increases in 1995. The percent share of spending held by Korean and ROW companies has more than dou- bled since 1991.

ROW Companies European 6% ROW Companies European Companies 8% Companies 13% 8% Korean Companies North 8% American Japanese Companies Korean North $12.6B Companies $41.8B 35% American 50% Companies Companies 17% Japanese 28% Companies 27%

1991 1996 (EST)

Source: ICE, "Status 1997" 19819D

Figure 2-38. Capital Spending Make-Up

Figure 2-39 shows the total capital spending as a percentage of IC sales for each of the world regions in 1996. There are two key trends revealed by the figure. One is the fact that companies in Taiwan and Korea spent a very large percentage of their sales on semiconductor capital, and two, they did not trim their budgets in response to the weak market conditions during the year. In 1996, Taiwanese and Korean companies are estimated to have spent 87 percent and 62 percent of their IC sales on fab facilities and equipment, respectively. In comparison, North American, Japanese, and European companies spent between 23 and 30 percent.

Leading North American Spenders

Figure 2-40 lists the leading North American spenders of 1996. Spending by the North American companies is estimated to have increased three percent in 1996, compared to 55 percent in 1995. Despite a decrease in the growth rate over 1995 capital spending, many semiconductor manufacturers are still spending considerable amounts of money on new fab facilities and carrying out expansion plans that were previously set.

2-68 INTEGRATED CIRCUIT ENGINEERING CORPORATION Worldwide IC Vendors

100

80 1995 1996 (EST) 70

e 60 g 50 centa er

P 40

0 Taiwanese Korean European Japanese North American Companies Companies Companies Companies Companies

Source: ICE, "Status 1997" 21778

Figure 2-39. Capital Spending as a Percent of IC Sales (1995-1996)

1996/1995 1996 1996 Company 1995 Percent Rank (EST) Change 1 Intel 3,600 3,400 6 2 TI 1,800 1,150 57 3 IBM 1,500 1,000 50 4 Motorola 1,260 2,530 Ð50 5 Micron 1,160 1,190 Ð3 6 AMD 625 621 1 7 Rockwell 550 360 53 8 National 525 620 Ð15 9 Atmel 350 270 30 10 LSI Logic 300 233 29 11 VLSI Technology 250 204 23 11 Analog Devices 250 220 14 11 Lucent Technologies 250 210 19 12 IDT 245 260 Ð6 13 Cypress 225 195 15 Others 1,600 1,552 3 Total 14,490 14,015 3 Source: ICE, "Status 1997" 14538Q

Figure 2-40. North American Merchant Semiconductor-Related Capital Expenditures ($M)

INTEGRATED CIRCUIT ENGINEERING CORPORATION 2-69 Worldwide IC Vendors

To maintain its lead in the rapidly changing and increasingly competitive microprocessor market, Intel has invested heavily in new plants and equipment over the past few years. The company continues to increase capacity for its Pentium processor and prepare for future capacity needs for its sixth-generation Pentium Pro (P6) MPU, which entered volume production in late 1995. Future spending for Intel includes adding a $1.5 billion fab facility at its Leixlip, Ireland, site, a $1.6 billion plant in Israel, dedicated to flash memory production, and the conversion of its Fab 9 facility in Albuquerque, New Mexico, from logic to flash memory devices.

Texas Instruments originally said it will almost double its spending in 1996 as compared to 1995. However, during the year, the company scaled back its investments, but still spent an estimated 57 percent more than in 1995. Construction activities include a new $1.2 billion joint-venture fab with Alphatec Electronics in Thailand. Although TI is moving ahead with its ÒmegafabÓ complex in Dallas, Texas, the shell will be completely built but equipment will be installed gradually.

For 1996, IBMÕs capital spending is estimated to have increased 50 percent. Its current fab projects include: the expansion and upgrade for 64M DRAM production at the joint venture fab it shares with Siemens in Essonnes, France; the upgrade of its Burlington, Vermont, fab to 0.35µm and 0.25µm process capabilities; the expansion of MiCRUS, its joint venture fab with Cirrus Logic in New York; and the construction of a new $1.2 billion 64M DRAM plant in Manassas, Virginia, with Toshiba.

MotorolaÕs capital spending for 1996 is estimated to have been half of what it was in 1995. The company postponed construction plans on its Richmond, Virginia, facility and delayed the expansion of its MOS 13 fab facility in Austin, Texas, both by one year. However, the company still plans to build a new fab in Tainjin, China, and is adding a new facility to its Nippon Motorola plant in Aizu, Japan, both expected to be in production in 1998.

Micron held the fifth highest rank for capital expenditures for 1996, due primarily to the substantial conversion of the process lines in its Fab III from 150mm wafers to 200mm wafers, and is currently in process of converting Fabs I and II. Construction of its new $2.3 billion Utah manufacturing complex started in August 1995, but in early 1996, the company decelerated construction. The company will complete the fab shell, but will delay equipping the plant until market conditions warrant.

Leading Japanese Spenders

Figure 2-41 provides estimates for 1996 semiconductor capital spending by several of JapanÕs largest semiconductor producers. Overall, 1996 spending by the Japanese producers is estimated to have been four percent lower than in 1995 in terms of dollars, or 12 percent higher in terms of yen.

2-70 INTEGRATED CIRCUIT ENGINEERING CORPORATION Worldwide IC Vendors

1996 1996 1996/1995 Company 1995 Rank (EST) Percent Change

1 NEC 1,700 2,010 Ð15

2 Toshiba 1,560 1,545 1

3 Fujitsu 1,435 1,505 Ð5

4 Hitachi 1,380 1,755 Ð21

5 Mitsubishi 1,055 1,120 Ð6

6 Matsushita 1,000 885 13

7 Sharp 735 385 91

8 Sanyo 595 560 6

9 Sony 460 460 —

10 Oki 375 410 Ð9 11 Seiko Epson 330 310 6 12 Rohm 195 310 Ð37 13 Nippon Steel 120 110 9 Other 195 215 Ð9 Total 11,135 11,580 Ð4 1995: 94´ = $1.00 1996: 109´ = $1.00 Source: ICE, "Status 1997" 19098F

Figure 2-41. Japanese Semiconductor-Related Capital Expenditures ($M)

The Japanese have been hit hard by the decline in DRAM prices, but are doing their best to keep up with the high level of spending by the Korean and Taiwanese DRAM manufacturers. Spending by the Japanese in 1995 and the early part of 1996 was primarily focused on the ramp up of 16M DRAM production. However, 16M production increases were cut back and the focus was shifted to the 64M generation. For example, NEC is constructing a new 64M DRAM fab in Hiroshima, Hitachi is building a 64M DRAM production fab in Nakakoma, and Mitsubishi began the construction of a new 64M DRAM-dedicated fab at its Saijo site. Meanwhile, Matsushita is building in Tonami to expand its capacity not only for DRAMs, but also for microcontrollers and advanced ASICs. Spending by Sharp and Sanyo are focused on boosting flash memory capacity in Fukuyama and Niigata, respectively.

Due in part to dramatic fluctuations in the yen-to-dollar exchange rates, Japanese companies have in recent years placed greater emphasis on spending abroad. NEC is adding a new $800 million 64M DRAM fab to its Scotland site. Hitachi is working on two fab projects in Texas, the expansion of its existing fab in Irving and the completion of a new joint DRAM manufacturing facility in Richardson with TI. Fujitsu announced major expansions of its fab facilities in Oregon and the United Kingdom, each costing at least $1 billion.

INTEGRATED CIRCUIT ENGINEERING CORPORATION 2-71 Worldwide IC Vendors

The most significant offshore announcement came from Toshiba, who, until 1995, stuck by its strategy to focus its IC production in Japan. The announcement of intentions to establish its first overseas wafer fab came in April 1995. A few months later, the company made its official announcement; it had agreed to join IBM in constructing a $1.2 billion 64M DRAM plant in Manassas, Virginia. The facility is currently under construction and will be ready for volume production in late 1997 or early 1998.

Leading Korean Spenders

The Koreans continue to invest heavily in semiconductor plant and equipment (Figure 2-42). The main Korean IC companies, Samsung, LG Semicon, and Hyundai, are estimated to have increased their semiconductor capital spending levels in 1996 by nine percent over 1995. This is an indica- tion of the countryÕs commitment to the IC industry and how quickly it has become a global force.

1996/1995 1996 1996 Company 1995 Percent Rank (EST) Change

1 Hyundai 2,500 2,100 19 1 LG Semicon 2,500 2,100 19 2 Samsung 2,000 2,200 Ð9 Others 250 175 43 Total 7,250 6,575 10

Source: ICE, "Status 1997" 13859Q

Figure 2-42. Korean Semiconductor-Related Capital Expenditures ($M)

While SamsungÕs capital expenditures decreased nine percent from 1995, Hyundai and LG Semicon boosted their spending to become the two largest Korean spenders for 1996, both with 19 percent growth over 1995. Current projects for Hyundai include the construction of its first offshore fab, located in Eugene, Oregon. The facility will be used for 16M and 64M DRAM production and is expected to start operations in 1997. Hyundai expects to start work on another offshore fab in 1997, to be located in Scotland. LG Semicon is building a fab in Chong-ju, Korea and plans to start construction in 1997, of a fab in Wales, United Kingdom, its first fab outside of Korea.

Also making a move with an overseas facility is Samsung, who is building a fab facility in Austin, Texas. Production at the facility is not expected to commence until 1998. Samsung has set a long- term goal to produce more than half of its products in foreign facilities.

2-72 INTEGRATED CIRCUIT ENGINEERING CORPORATION Worldwide IC Vendors

Leading ROW Spenders (Excluding the Koreans)

Taiwanese semiconductor companies are the big spenders in the ROW region, outside of Korea (Figure 2-43). New fabs announced since 1993 total over $16 billion. Figure 2-44 lists recent and planned investments in 200mm wafer fabs. Much of the spending will go for building foundry- dedicated facilities and DRAM plants. Weakness in the DRAM market has slowed spending in Taiwan somewhat. For example, TI-Acer and Vanguard both announced delays in the construction of new DRAM fabs and Tatung, one of TaiwanÕs largest consumer electronics businesses, canceled its plans to enter the DRAM market.

1996/1995 1996 1996 Company 1995 Percent Rank (EST) Change

1 TSMC 1,000 600 67 2 TI-Acer 675 595 13 3 UMC 600 570 5 4 Mosel-Vitelic 520 430 21 5 Vanguard 400 270 48 6 Winbond 350 254 38 7 Macronix 200 113 77 8 HMC 60 50 20 9 Holtek 30 10 200 Others 110 73 51 Total 3,945 2,965 33

Source: ICE, "Status 1997" 19549E

Figure 2-43. Taiwanese Semiconductor-Related Capital Expenditures ($M)

Meanwhile, foundry supplier TSMC completed construction of its second 200mm wafer fab in 1996 and is currently working on its third, both located in Hsinchu. Using funds from a host of fabless and fabbed capacity seekers, UMC is also building several 200mm wafer foundries in Hsinchu. Mosel-Vitelic (in partnership with Siemens) and new companies Powerchip and Nanya Technology were expected to complete the construction of their DRAM fabs by the end of 1996.

Other firms located in the Asia-Pacific region are also making heavy investments in semiconductor production. For example, Chartered Semiconductor of Singapore, a foundry-dedicated company, began construction of its third major plant. Chartered has plans to build three additional fabs by the end of 2000.

INTEGRATED CIRCUIT ENGINEERING CORPORATION 2-73 Worldwide IC Vendors

Investment Ground- Capacity Major Company Factory Completion ($M) Breaking (K pc/M) Products

Vanguard Fab I-A 680 N/A 1994 15 DRAM, SRAM Fab I-B 750 1995 1996 15 DRAM, SRAM TSMC Fab III 1,000 1993 1995 25 Foundry Fab IV 1,000 1995 1996 30 Foundry Fab V 1,000 1995 1997 25 Foundry TI-Acer Fab I-B 500 1994 1995 15 DRAM Fab II 1,100 1995 1997 40 DRAM UMC Fab III 1,000 1994 1995 25 CPU, SRAM, Foundry USC Fab I 1,000 1995 1996 25 Foundry UICC Fab I 1,000 1995 1997 25 Foundry USI Fab I 1,000 1995 1998 25 Foundry Nanya Fab I 750 1995 1996 24 DRAM Powerchip Fab I 750 1995 1996 25 DRAM HMC#1 Fab I 400 1994 1996 15 Memory, ASIC Macronix Fab II 1,100 1995 1997 35 NV Memory, Logic Winbond Fab III 1,100 1995 1997 40 SRAM, Logic (Module A) Mosel-Vitelic Fab II 1,100 1995 1997 25 DRAM, SRAM, Logic ASMC Fab I 750 N/A 1996 30 Foundry (DRAM, Logic) Holtek Fab II 750 Early 1996 1997 25 MCU, ASIC Totals 16,730 484

Source: ERSO/ITRI ITIS Project/ICE, "Status 1997" 21766

Figure 2-44. 8-Inch Fab Investment in Taiwan

In the coming years, look for semiconductor expenditures in China to grow substantially as the country strives to become a significant semiconductor producer. New fabs are also sprouting up in countries like Malaysia and Thailand.

Leading European Spenders

European semiconductor capital expenditures are estimated to have grown 5 percent in 1996 (Figure 2-45), compared to the 1995 growth rate of 64 percent. EuropeÕs three largest semiconductor suppliersÑSGS-Thomson, Philips, and SiemensÑrepresented 80 percent of total semiconductor capital spending in Europe compared to 78 percent 1995.

2-74 INTEGRATED CIRCUIT ENGINEERING CORPORATION Worldwide IC Vendors

1996/1995 1996 1996 Company 1995 Percent Rank (EST) Change 1 Siemens 1,300 850 53

2 SGS-Thomson 1,000 1,002 —

3 Philips 510 750 Ð32

4 TEMIC 120 110 9

5 Alcatel Mietec 90 87 3

6 GEC Plessey 50 155 Ð68

7 Ericsson 40 55 Ð27

8 ITT Semiconductors 35 42 Ð17

9 AMS 25 24 4

Others 358 275 30

Total 3,528 3,350 5

Source: ICE, "Status 1997" 12143S

Figure 2-45. European Semiconductor-Related Capital Expenditures ($M)

The majority of SiemensÕ spending in 1996 was for the construction of a new $1.8 billion fab facility in Newcastle, United Kingdom. In addition, the company is involved in several new fab joint ventures, such as the White Oak Semiconductor fab being built in Richmond, Virginia in partnership with Motorola and the ProMOS Technologies venture with Mosel-Vitelic in Taiwan.

In early 1996, SGS-Thomson began building its fourth 200mm fab in Rousset, France, at the site of an existing 125mm wafer plant. STM began work on a new submicron wafer fab in Singapore, in addition to investing $350 million to increase capacity in its existing Singapore fab. Construction on the new Singapore facility began in late 1996 with production expected to start in late 1998.

Philips opened its largest fab facility in Nijmegen, The Netherlands. The new facility, named MOS4YOU (Yield Output Utilization), is processing 200mm wafers using 0.5µm process technology, with plans to switch to a 0.35µm process in 1998. Philips is also busy converting its fab facility in Shanghai, China, into a foundry-dedicated operation modeled after TSMC (of which Philips owns 35 percent) and jointly owned with Northern Telecom and several Chinese interests. The new operation, called Advanced Semiconductor Manufacturing Corp. (ASMC), will be capable of processing circuits with 0.8µm geometries on 150mm wafers.

Future Capacity Trends

In all, it is estimated that 38 new fab facilities or major expansions underwent construction in 1996 versus 60 in 1995. Of those, 12 were in North America, 7 in Japan, 5 in Europe, and 14 in other parts of the world (Figure 2-46).

INTEGRATED CIRCUIT ENGINEERING CORPORATION 2-75 Worldwide IC Vendors

Europe Europe North America 13% 18% ROW 32% Japan 1995 1996 37% 18% Japan 60 Fabs 38 Fabs 20% ROW North America 30% 32%

Source: ICE, "Status 1997" 21209A

Figure 2-46. New Fabs or Major Expansions Started in 1995 and 1996

Figures 2-47 and 2-48 provide a look at the industryÕs capital expenditures as a percent of semiconductor production from 1979 to 1996, as well as a forecast for 1997. As shown, spending in 1996 as a percentage of production is estimated to have been at its highest level since the mid- 1980Õs! However, the spending percentage for 1997 is expected to drop as the result of an overca- pacity situation beginning to fully impact IC manufacturers.

Overall, it appears that the majority of semiconductor companiesÕ spending plans are Òreac- tionaryÓ to market trends. Thus, when the market is booming, spending will surge. However, when demand slows, most companies will put expansion plans on hold until business picks up.

STARTUPS

Over the past decade, some 150 or more semiconductor startup companies have been established, and despite the increasingly competitive nature of the semiconductor industry, startup companies continue to emerge. Development programs cost more, require more time, and are much more risky. As a result, many technology advances require the financial resources of huge semiconductor companies. Nevertheless, many innovations are still brought forth from small, entrepre- neurial ventures.

Anymore, startups in the U.S. rarely begin operations with a new fab. Looking back on the for- mative years of the semiconductor industry (the 1960Õs), most firms included funding for a production facility as part of the capital needed to initiate business. In most cases, a wafer fab was a mandatory part of being in the IC business. With few exceptions, this thought process continued throughout the 1970Õs and early 1980Õs. Figure 2-49 lists the few firms that have started operations with a fab in recent years. It should be noted that four of the companies in the figure (Cirent, GMT, Mid-West, and Seaway) own fabs that were already in existence.

2-76 INTEGRATED CIRCUIT ENGINEERING CORPORATION Worldwide IC Vendors

Worldwide Worldwide Capital Spending Year Semiconductor Capital Spending (Percent Production ($B) ($B) Of Production)

1997 (FCST) 149.7 39.6 26.4 1996 (EST) 134.6 41.8 31.1 1995 147.7 39.7 26.9 1994 104.6 22.8 21.8 1993 79.8 15.4 19.3 1992 62.3 11.4 18.3 1991 58.5 12.6 21.5 1990 57.5 12.0 20.9 1989 55.0 11.6 21.1 1988 50.5 9.4 18.6 1987 36.7 5.9 16.1 1986 29.6 4.8 16.2 1985 23.7 6.3 26.5 1984 28.1 7.7 27.4 1983 18.3 4.1 22.4 1982 14.4 2.8 19.4 1981 14.3 2.9 20.3 1980 13.8 2.6 18.8 1979 10.9 2.0 18.3

Source: ICE, "Status 1997" 14532Q

Figure 2-47. Trends in Semiconductor Capital Spending as a Percent of Production

33 32 31.1 31 30 29 28 27.4 27 26.5 26.9 26 26.4 25 24 23

Percentage 22.4 22 21.5 21.8 ’79-’96 Annual 21.1 21 20.3 Average 20 20.9 19.3 19 18.8 19.4 18 18.6 18.3 18.3 17 16 16.2 16.1 15 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 (EST)(FCST) Year Source: ICE, "Status 1997" 14537T

Figure 2-48. Worldwide Capital Spending as a Percent of Worldwide Semiconductor Production (1979-1997)

INTEGRATED CIRCUIT ENGINEERING CORPORATION 2-77 Worldwide IC Vendors

Company Location Products Processes Start Up Comments Date

Cirent Semiconductor Orlando, FL Logic ICs CMOS 1996 The joint venture between Cirrus Logic and Lucent Technologies will begin manufacturing 200mm wafers in 1997.

GMT Microelectronics Valley Forge, PA ASICs, CMOS, 1996 A group of investors led by GMT management foundry BiCMOS purchased the facility formerly owned by Commodore. The operation offers 1-, 2-, and 3-micron double-level metal CMOS, 1-, 2-, and 3-micron BiCMOS, and active-matrix LCD process capabilities.

Mid-West Lee's Summit, Foundry CMOS 1996 Former AT&T fab. Mid-West Micro intends to Microelectronics MO upgrade the facility to make memory and microprocessor-related chips.

Seaway Livermore, CA Foundry CMOS 1995 Purchased Intel's vacated Fab 3, which Seaway Semiconductor Inc. will convert to a foundry by the end of 1997. Seaway is upgrading the first 14,000 sq. ft. fab into a Class 10 cleanroom, with an expected capacity of 5,000 wafers per week. The second 13,000 sq. ft. fab is being upgraded to a Class 1 cleanroom, with an expected capacity of 3,750 wafers per week.

Silicon Valley San Jose, CA Foundry CMOS 1996 SVSC's fabrication facility is scheduled to be Semiconductor complete by the end of 1997. The company is Corporation (SVSC) led by Taiwanese investors.

TwinStar Richardson, TX 16M and 64M CMOS 1996 A joint venture of Texas Instruments and Semiconductor Inc. DRAMs Hitachi. The company will produce DRAMs for the partners at a new $500 million, 200mm wafer plant in Texas. Initial production of 16M DRAMs began in the summer of 1996.

Source: ICE, "Status 1997" 20236C

Figure 2-49. Sampling of North American Startups with Fabrication Facilities

Production costs increased as process geometries shrank and the financial burden associated with fab ownership became too great for many startup companies. Thus, going the fabless route and using foundry capacity became the most common method for startup companies to get their products to market. The number of fabless companies in North America is estimated to be about 120. Figure 2-50 lists a number of fabless companies that have recently started operations in North America.

ICE is not aware of any new Japanese IC manufacturers that have started operations in the past couple of years. Most startups in Japan in the past were the result of the countryÕs large automobile, steel, and chemical manufacturers and other conglomerates seeking to diversify their businesses to include semiconductor production. Figure 2-51 shows the only recent European startup that IC has record of. Wesson operates what was once an IBM-owned bipolar IC fab.

Recent startups in the Asia-Pacific region have been located primarily in Taiwan. TaiwanÕs semiconductor industry continues to pump large sums of money into its fab facilities. Figure 2-52 provides a sampling of recent IC startup firms in the Asia-Pacific region.

2-78 INTEGRATED CIRCUIT ENGINEERING CORPORATION Worldwide IC Vendors

START COMPANY LOCATION PRODUCTS PROCESS UP COMMENTS DATE

Lanstar Arlington, TX DRAMs CMOS 1995 A wholly owned subsidiary of Lanstar Computer Corp., Semiconductor Lanstar Semiconductor is initially operating as a fabless entity, but is seeking to purchase an existing foundry to expand its products to include SRAMs, VRAMs, and EPROMs.

Marvell Cupertino, CA PRML read-channel ICs CMOS 1995 A wholly owned subsidiary of Marvell Technology Group. Semiconductor Inc.

Novalog, Inc. Costa Mesa, CA Wireless infrared ICs, — 1995 Founded as a wholly-owned subsidiary of Irvine Sensors ASICs Corporation, Novalog specializes in the design and development of analog and mixed-signal circuitry.

SiGe Microsystems, Nepean, Ontario, RF ICs Bipolar, 1996 SiGe Microsystems is a supplier of SiGe-based bipolar Inc. Canada BiCMOS and BiCMOS ICs for RF and high-speed digital applications.

Source: ICE, "Status 1997" 12995AA

Figure 2-50. Sampling of Recent North American Fabless Startups

Company Location Products Process Fab Start Comments

Wesson France Corbeil-Essones, Telecommunications Bipolar 1995 The fab was purchased from IBM by Wesson France devices France SA, a new company representing a group of Hong Kong investors. The plant will process 1.0-micron bipolar chips primarily for Asian telecom markets.

Source: ICE, "Status 1997" 18545G

Figure 2-51. Recent European Startups With Fabrication Facilities

Spin-Offs

Not all startup companies develop from scratch. A recent trend has been for large, established companies to spin-off certain groups or divisions into new, autonomous companies (Figure 2-53). The result is a company who can specialize in a certain product area and focus all its resources and support on that one area. One recent example is AMD, which spun off their PLD business.

Pure foundry company UMC, has also used this practice. By spinning off all its standard IC product groups into separate companies, UMC is now able to focus its efforts on its foundry business, while its standard IC subsidiaries focus in their respective product offerings.

National Semiconductor also recently spun off a product division into a separate identity. Fairchild Semiconductor was established in 1996 when National broke off its logic and memory IC business, along with its discrete operation.

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Company Location Products Process Fab Start Comments

Advanced Semiconductor Shanghai, China Foundry CMOS, BiCMOS 1996 Originally established by Philips in 1991, the fab was converted Manufacturing Corp. of into a foundry operation jointly owned by Philips, Northern Shanghai (ASMC) Telecom, and several Chinese parties.

Anam Industrial Co./Texas Seoul, South DSP Chips CMOS 1998 The joint venture fab is expected to begin production in the first Instruments Korea half of 1998.

Asian Semiconductor Hsinchu, Taiwan Foundry CMOS 1996 Built a 200mm wafer fab with a production capacity of 3,750 Manufacturing Co., Ltd. wafers per week.

Interconnect Technology Sarawak, Foundry CMOS 1998 Malaysia's first front-end wafer fabrication facility. Malaysia

Nanya Technology Corp. Taipei, Taiwan DRAMs CMOS 1996 The Formosa Plastics subsidiary began processing 1,250 200mm wafers/week in July 1996 in a new fab.

Powerchip Semiconductor Hsinchu, Taiwan 16M and 64M DRAMs, CMOS 1996 Joint venture between Mitsubishi and Taiwan's UMAX group, a Corp. logic ICs scanner maker that took over Elitegroup, Taiwan's second largest mother board manufacturer. Mass production of 200mm wafers was expected to begin in 4Q96. Full capacity is expected to reach 5,000 wafers/week.

ProMos Technologies, Inc. Hsinchu, Taiwan DRAMs CMOS 1996 A joint venture between Mosel Vitelic and Siemens AG. Initial production will begin with 64M DRAMs and move to 256M in the future.

Submicron Technology Bangkok, Foundry CMOS, BiCMOS 1996 Alphatec, traditionally a contract chip assembler, is building an Thailand $800 million wafer fab in Bangkok. Plans call for 6,000 200mm wafers per week capacity.

United Semiconductor Hsinchu, Taiwan Memories, graphics CMOS 1996 Located at UMC's manufacturing complex, this company is Corp. chips, foundry jointly owned by UMC (50%), Alliance Semiconductor (20%), S3 Inc. (20%), and local investors (10%).

Vanguard International Hsinchu, Taiwan 4M and 16M DRAMs CMOS 1995 Purchased from the Taiwanese government by a consortium of Semiconductor Corp. (VISC) companies including TSMC and Winbond. The consortium planned to build a second fab, at a total cost of $1-1.45 billion

Source: ICE, "Status 1997" 18544J

Figure 2-52. Recent Asia-Pacific Startups with Fabrication Facilities

Subsidiary Location Products Parent Company

AMD Subsidiary Sunnyvale, CA PLDs AMD

Davicom Semiconductor Inc. San Jose, CA Communications ICs UMC

Fairchild Semiconductor San Jose, CA Logic and Memory ICs; National Discretes Semiconductor

HolonTech Corporation San Jose, CA Network Computing NEC Software and Components

Integrated Technology Express Milpitas, CA PC Chipsets UMC

VSIS, Inc. San Jose, CA Multimedia ICs Mitsubishi

Source: ICE, "Status 1997" 21723

Figure 2-53. Sampling of 1996 Spin-Offs

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SEMICONDUCTOR CONSORTIUMS

Increasingly, survival in the fast-paced semiconductor industry is dependent not only on how well a company competes, but also on how well it creates new technologies to maintain its competitive edge. Some of the technological prowess, whether in design or in manufacturing, originates in the facilities of consortiums around the world who, in turn, pass along their findings to member/con- tributing companies, regional companies, or to the industry in general.

Provided below is an overview of activities and highlights at several semiconductor consortiums around the world.

North American Consortiums

Sematech

Sematech was established in 1987 to improve U.S. competitiveness in the semiconductor industry. Sematech (Semiconductor Manufacturing Technology Consortium, Inc.) now consists of 10 major U.S. semiconductor manufacturers. Current members include AMD, Digital Equipment Corp., IBM, Intel, Hewlett-Packard, Lucent Technologies, Motorola, National, Rockwell, and Texas Instruments. Up through 1996, the Department of Defense (DoD) was also a member and provided the majority of its funding. Annual funding of Sematech by the U.S. government continued declining from a high point in 1992, dramatically affecting the consortiumÕs annual budget (Figure 2-54). In 1994, the decision was made to phase out government funding by 1996.

300

250

200

150

Millions of Dollars 100

0 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 (EST) (FCST) (FCST) Year Source: Solid State Technology/ICE, "Status 1997" 20462A

Figure 2-54. SematechÕs Budget

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Beginning in 1997 SematechÕs budget will be entirely funded by private financing and contributions from member companies. In addition, Sematech will expand its membership with an effort to promote participation from non-U.S.-owned companies. With the end of U.S. government funding, it will be more feasible for international companies to join.

There have been many successes at Sematech including increased equipment reliability, improved software, and the development of standards for equipment safety, cleanliness, and integration. Its fab has become a lab for advancing new technology and passing that on to member companies (member companies are those who are mostly involved with high-volume, multi-product IC manufacturing). Also among SematechÕs successes is its involvement in the development of the Semiconductor Industry Association (SIA) National Technology Roadmap for Semiconductors, which serves as a blueprint for many semiconductor technology developments.

Listed below are some of the key events at Sematech announced in 1996.

¥ Elected current president and CEO, William Spencer, as the chairman, effective August 1, 1996. He announced plans to retire from the positions of president and CEO sometime during 1997. SpencerÕs predecessor, Robert Galvin, will become vice chairman.

¥ Announced its decision to increase annual memberships dues 30 percent. The Sematech board elected to increase the individual membership dues from the current annual total of $92 million to $120 million. The increase will be effective January, 1998.

¥ Awarded its first electronic design automation (EDA) contract to Synopsys. As part of the $6 million contract, Synopsys will develop a series of design tools. The focus of the joint development project is to address what Sematech refers to as a Ògrowing design productiv- ity crisis.Ó

¥ Due to the phasing out of government funding, Sematech will cut several programs, as well as its contributions to universities and the Semiconductor Research Corporation.

¥ Agreed with Interconnection Technology Research Institute (ITRI) to jointly research and develop advanced interconnect technology between bare silicon and PC boards. A major part of the companiesÕ focus will be on plastic ball grid arrays (PBGAs).

International 300mm Wafer Initiative (I300I)

I300I is a new organization formed in 1995 by Sematech to develop 300mm wafer fabrication technologies. Participation in I300I is open to foreign companies with wafer fabs located in the United States. Activities in 1996 continued to focus on standard requirements, silicon supply,

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performance metrics, demonstration methods, and process support relating to the development of 300mm wafers. The organization plans to begin 300mm pilot equipment demonstrations as well as begin defining requirements for 0.18µm manufacturing technology.

I300I has 13 industry members, which include AMD, Lucent Technologies, IBM, Intel, Motorola, and Texas Instruments from the U.S.; Siemens, SGS-Thomson, and Philips from Europe; Hyundai, LG Semicon, and Samsung from Korea; and TSMC from Taiwan. Current funding is said to be $2 million from each of the 13 participants and is expected to sufficiently cover the initial 18 month program, which began in January 1996.

Semiconductor Research Corporation (SRC)

The SRC was formed in 1982 by the Semiconductor Industry Association to strengthen and maintain the vitality of the North American semiconductor industry. It is a non-profit organization that plans and implements an integrated program of basic research conducted by faculty and gradu- ate students at leading universities in the U.S. and Canada.

More than 60 companies fund research in five major areas: manufacturing systems, manufacturing processes, design, microstructure, and packaging. Research at SRC accounts for more than half of all silicon-related research conducted at U.S. universities.

The Fabless Semiconductor Association (FSA)

A group of 40 companies (including Actel, Cyrix, and Sierra Semiconductor) formed the Fabless Semiconductor Association in 3Q94. The group cooperates with IC producers that have fabs on forecasting capacity and process technology trends.

It is not surprising that IC foundry companies like TSMC and Chartered Semiconductor are working with FSA. With fabless IC companies representing an increasing share of total IC sales in North America each year, the timing of the creation of the FSA seems appropriate.

Virtual Socket Interface (VSI)

The alliance was formed in 1996 to develop technology and standards for systems-on-a-chip, as well as focus on developing standards that will provide a simple, cost-effective way to mix and match intellectual property (IP) blocks from multiple sources. The alliance is made up of EDA, semiconductor, systems, and IP vendors (see Section 3 for a complete list of members). Though it is encouraged, companies are not required to contribute their IP.

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Strategic Microelectronics Consortium (SMC)

CanadaÕs Strategic Microelectronics Consortium (SMC) is seeking to help the nationÕs semiconductor industry achieve its objective of $1 billion in sales by the year 2000. The consortium is funded 50 percent by its members and 50 percent by the Canadian government. Several key projects for 1996 included the development of image resizing DSP devices, the achievement of very low power signal generation and clock recovery at data rates exceeding two gigabytes per second, and work in asynchronous transfer mode (ATM), radio frequency (RF), and ferroelectric structure technologies.

SyncLink

SyncLink is a consortium made up of thirteen companies including 12 of the top DRAM suppliers. The focus of the group is to work together to develop an open, royalty-free industry standard for high-performance DRAMs. The SyncLink standard is a step beyond synchronous DRAMs (SDRAMs). SyncLink devices, called SLDRAMs, will be targeted at applications in the main memory of personal computers and workstations. The first SLDRAM devices are expected in late 1997.

The current members of SyncLink include Apple Computer, Fujitsu Microelectronics, Hewlett- Packard, Hitachi, Hyundai Electronics, IBM Microelectronics, IBM Corporation, Micron Technology, Mitsubishi Electronic America, MOSAID Technologies Inc., NEC, Nippon Steel Semiconductor, Oki, Samsung Electronics, Texas Instruments, and Toshiba. Membership in SyncLink is open with membership fees currently ranging from $25K to $50K per year.

Japanese Consortiums

Semiconductor Industry Research Institute Japan (SIRIJ)

The Semiconductor Industry Research Institute Japan, based in Tokyo, was established in 1994 by ten leading Japanese semiconductor makers: Fujitsu, Hitachi, Matsushita, Mitsubishi, NEC, Oki, Sanyo, Sharp, Sony, and Toshiba. In late 1996, Texas Instruments Japan, Nippon Motorola, and Rohm joined SIRIJ. The institute serves as an independent organization, maintaining cooperative relations with the semiconductor industry, the government, and academia. It will focus on research concerning the development and promotion of semiconductor technology, world environment problems, international cooperation, and technology exchange.

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Association of Super-advanced Electronics Technology (ASET)

The ASET project is a long-term, government-funded project to develop the basic technologies required for future process generations. The organization will receive a total of about $300 million in government funding over the next five years, which it plans to use for semiconductor, magnetic storage, and display device research.

ASET has already received its first year budget of $100 million, of which it plans to spend $78 million in the semiconductor field, $20 million on magnetic storage research and development, $1 million in display device R&D, and $1 million in facility and administration costs.

Advanced lithography, including 193nm optical and synchrotron-based x-ray, will be ASETÕs main focus.

ASET has 21 member companies including all the top Japanese chip makers and the Japanese subsidiaries of Texas Instruments, IBM, and Merck.

Semiconductor Leading Edge Technologies Inc. (Selete)

Selete consists of JapanÕs ten largest semiconductor companies and is expected to receive $350 million between 1996 and 2000. The research projects for Selete are focused 300mm wafer equipment, CIM software, factory design, and issues related to deep-submicron process development. Selete is currently building a cleanroom in Yokohama, within an existing Hitachi laboratory. The fab facility is expected to begin pilot production in mid-1997.

Super Silicon Crystal Research Institute Corporation (SSi)

SSi is a newly established consortium made up of seven Japanese materials suppliers and the Japanese government agency. The organization was formed to explore silicon materials technology, specifically examining key technologies for production of 400mm silicon crystal growth and 400mm wafer production. A second focus for the organization is to examine the technical uncer- tainties of large wafer development.

European Consortiums

Intra-university Microelectronics Center (IMEC)

IMEC, a consortium based in Belgium, has become one of the most influential research organizations in the region and is committed to the design, production, and testing of ICs. It is a major contributor to both EuropeÕs ESPRIT and JESSI projects.

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Major research projects for IMEC include the development of 0.25µm/0.18µm CMOS technologies, the development of VLSI methodologies for real-time data processing, and the development of new ASIC design tools for use in commercial products.

Other projects underway focus on such technologies as ultraclean processing, silicides and inter- connects, software development, compound semiconductor processing, materials processes, packaging, and microsystems.

Micro-Electronics Development for European Applications (MEDEA)

A follow-on project to EuropeÕs JESSI project (which ended in 1996), MEDEA is a collaborative industrial R&D program targeting two basic fieldsÑIC technology and systems-on-a-chip (Figure 2-55). The members of MEDEA will focus on two core competencies: applications and semiconductors.

Application Core Competencies

Multimedia Communication Automobile

Semiconductor Core Competencies

Design Techniques System-on- and Libraries a-Chip Domain

Silicon Processes IC Technologies Domain Manufacturing Technology

Source: MEDEA/ICE, "Status 1997" 21722

Figure 2-55. MEDEA Cooperation Domains

In the semiconductor core area, MEDEA will focus on three areasÑdesign technologies and libraries, silicon processes, and manufacturing technology (0.25µm and 0.18µm technologies).

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In the second area of focus, application-related development, MEDEA will support application- specific product developments in three areasÑmultimedia, communications, and automotive electronics. MEDEAÕs application-specific ICs will not be exclusively ASICs, as its application- specific area is focused on standard products as well.

MEDEA will be made up of a limited number of participants who will be required to submit their proposal for approval, will be selected for their ability to contribute significantly to the strategic and technical goals of MEDEA. The European IC makers will provide basic technology platforms and specific contributions relating to IC technologies, equipment, and design will be contributed by other companies.

The program will begin January 1997 and continue until December 2000. The total cost of MEDEA is estimated to be about two billion European Currency Units (ECUs). MEDEA will receive half of its funding from participating companies and the rest from the EU and National Governments. Figure 2-56 shows the distribution of funding into the six core areas and Figure 2-57 shows a timeline for MEDEAÕs development goals.

Manufacturing Design 13% 10% Multimedia 24%

Automotive Communications 13% CMOS 20% Technology 20%

Source: MEDEA/ICE, "Status 1997" 21721

Figure 2-56. Distribution of MEDEA Funding (2000M ECUs)

Milestone Year

Successful beta-testing for selected 300mm equipment in 0.25µm technology 1997 Successful beta-testing for selected 300mm equipment in 0.18µm technology 1999 CMOS basic logic processes such as 0.25µm 3.3-1.8V available 1999 Commercial delivery of 0.25µm CMOS on a chip with high density logic and memory 1999 Test chip for 0.18µm logic on an industrial line 2000

Source: European Semiconductor/ICE, "Status 1997" 21720

Figure 2-57. Planned MEDEA Milestones

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Open Microprocessor Systems Initiative (OMI)

OMI was launched in 1992 as part of the European UnionÕs ESPRIT program. OMI membership is open to all organizations carrying out R&D in Europe, including foreign companies with R&D facilities in Europe. Motorola, IBM, Apple Computer, and Sun Microsystems are among the non- European members of OMI. The list of European members includes Advanced RISC Machines (ARM), SGS-Thomson, GEC Plessey, University of Edinburgh, Matra Hachette Multimedia Systems (France), Gemplus (France), Syndesis (Greece), Etnoteam (Italy), and IMEC (Belgium). In all, there are more than 400 companies, universities, and research establishments working on more than 40 projects under OMI.

OMIÕs original mission was to challenge U.S. dominance of the European MPU market by providing European manufacturers easy access to current and future generations of microsystems architecture. This would be accomplished not by developing new microprocessor technology but by forming a technical bridge between European and non-European technology.

ROW Consortiums

Taiwan Semiconductor Industry Association (TSIA)

TSIA is made up of 57 member companies who have joined together to boost TaiwanÕs competitiveness within the semiconductor market. Several key areas TSIA plans to focus on include trade, intellectual property, and research and development of 300mm wafer technology.

Taiwan Submicron Consortium

The Taiwan Submicron Consortium operates under the leadership of TaiwanÕs Electronics Research and Service Organization (ERSO) and the Industrial Technology Research Institute (ITRI) and is supported by both the local semiconductor industry and the Taiwanese government.

The consortiumÕs Submicron Process Technology Development Project was instituted in 1990 with the goal of establishing Taiwan as a major force in the global semiconductor and electronics industries. This project has played a major role in developing the countryÕs first 200mm wafer fab and achieving 0.7µm process technology, which was transferred to UMC and TSMC. The consortium has also developed 0.5µm 16M DRAM and 4M SRAM technologies, which were provided to local IC manufacturers in 1996.

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Early in 1994, ERSO began searching for investors to spin off its R&D fab facility, with process technology and research personnel to be included. In July 1994, it was announced that the 200mm wafer fab would be acquired by a 10-member consortium, led by TSMC. The consortium turned the fab operation into an independent commercial DRAM companyÑVanguard International Semiconductor Corporation (VISC).

In 1995, the Taiwan Submicron Consortium started a new program called the DEEP Submicron Joint Development Project, which is geared at uniting local IC manufacturers, research organizations, and equipment suppliers to develop 0.25µm process technology.

Korean Consortiums

Although no details are publicly available, its is believed that the Korean semiconductor industry is receiving substantial indirect financial support from the Korean government. Rather than supporting its industry through the medium of joint cooperative R&D, the Korean government has expressed its commitment to the IC industry by making capital investments in wafer fabrication facilities.

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