Zilog bares Mod III schedule, hints at more fabs

Electronic News, July 25, 1994 by Jim DeTar

NAMPA, IDAHO, - Construction of Zilog's $200 million Mod III wafer fabrication facility here is expected to be completed in November, at which time manufacturing equipment installation will begin. When it is up and running at full capacity - which is slated for April 1997 - the 0.6-micron, 8-inch CMOS fab will generate an estimated additional $250 million in revenue for Zilog. Last week, the company revealed that plans for its next two fabs, Mods IV and V, are already on the drawing boards.

Zilog swung its doors wide open to customers, vendors and invited media last week, providing tours of its under-construction Mod III fab, marking the company's 15th anniversary of chip production at its Nampa manufacturing facilities. The company's original fab, Mod 1, and a second fab, Mod II, are located in a 109,000-square-foot building in Nampa.

Mod III will occupy a nearby building at the same location. The 128,000-square-foot building was acquired from Exxon as part of a management buyout that made Zilog an independent company in 1989. An additional 16,000 square-feet is being added by Marshall Contractors, the project's construction management firm, which will bring the total area of Mod Ill to about 144,000 square feet.

Michael J. Bradshaw, Zilog's senior VP of worldwide operations, said the company has rough plans on the boards for two additional facilities, Mods IV and V, which will also be built at the 90-acre Nampa campus. Mr. Bradshaw said if the company grows at a rapid pace then "We would have to start to lay out (Mod IV) in two years. Mod IV will be about 0.3-micron and will be a scalable building. We will make sure equipment vendors are on the same track before we commit to that geometry, but we expect an easy migration," Mr. Bradshaw said. He added that the planned new facilities would not come on-line until after the turn of the century. "Mod III will take me to the year 2000."

Hinting that the company may go on the acquisition path during the next two years, which would force it to accelerate its building schedule, Mr. Bradshaw said "We may have acquired someone by then," adding that if the company does acquire another company (or companies) it will centralize manufacturing for the acquired company in Nampa. "I believe in one campus - that way there is one plant manager, one HR (Human Resources) person and so on."

He noted financial health of the company is the primary consideration as to how quickly Mods IV and V will be built. "With Mods IV and V, we will build to what the company can afford." Currently the company's financial health is robust, and it has a growing reserve of cash to go on a buying spree if it chooses. Zilog reported 2Q results last week, with net sales of $55.4 million, up 12 percent from the $49.6 million a year earlier. Income of $8.6 million was likewise up from $6.4 million in the year earlier period. Total current cash assets including cash and short-term investments equal $90.5 million, up from $75 million just six months earlier.

Mod III will be a class 10 facility with four clean rooms and between 70 and 80 class 1 standard mechanical interface (SMIF) minienvironments. Manufacturing equipment that will be installed during a six-phase installation between now and 1997 will include a LAM 4420 etcher, MRS deposition system and Canon I-Line steppers.

Although robotic arm transfer capability is not currently installed in Mod III, the company is considering putting it in, according to David Nuerenberg, Zilog's director of quality assurance. "The question is: what is your payback? Some Japanese companies have done that but it has not been cost-effective.," Still, the new fab will incorporate sliding doors and airlocks to help prevent contamination of clean rooms.

Zilog's original Mod I, built 15 years ago, is still doing NMOS manufacturing. "Many people think NMOS is going away. We find there is still demand worldwide for simple NMOS architecture, such as the Z80," Mr. Nuerenberg noted. The combined test area for Mods I and II does a total 10 million circuits a month, he added. Among the products produced there are Zilog's spread spectrum radio devices.