AMI: green light on $200M expansion

Electronic News, June 12, 1995 by Crista Hardie

POCATELLO, IDAHO--American Microsystems, Inc. (AMI) said its parent company, Japan Energy Corporation, has approved a $200 million expansion to its semiconductor wafer manufacturing facilities here. The expansion, expected to take 22 months to complete, will provide 40,000 square feet of clean room space, and will eventually replace AMI's existing fab with double the capacity.

With ground-breaking scheduled for July 1995, the expansion will be self-funded through bank loans and future cash flow, AMI said, and will be on property obtained from Idaho State University (EN, March 28, 1994). However, because of the land grant charter of the university, AMI is not able to purchase the property directly, but is reportedly working on a land swap. Essentially, AMI will buy land elsewhere in Pocatello and then trade the property to the university in exchange for the land adjacent to its current factory.

The new facility, designated Fab 10, will be equipped in stages. Initially using about half the proposed clean room area, it will be capable of starting up to 5,000 6-inch wafers per week. The remaining clean room area will be available for future growth, and the expansion is expected to fulfill growing capacity requirements for at least the next five years, AMI said.

"Over the past five years, our business has almost tripled," noted Jerry Homstad, president and CEO of AMI. "In addition to responding to an increased demand for existing products, our fab expansion will support a continued push into submicron ASICs, the production of new families of application-specific standard products, and the maintenance of long-term foundry alliances."

Phase one of the expansion will incorporate 0.5- and 0.6-micron processes, both 3-volt and 5-volt, according to Harold Blomquist, AMI's VP of sales. "We plan over time to ramp down the production of the existing 5-inch fab and convert that entire set of processes into the newer advanced environment." The current structure will be reserved for future expansion, he said.

Construction and equipment for the new facility is all purchased with the expectation of future migration from 6- to 8-inch wafers, Mr. Blomquist said, noting the immediate installation of 6-inch processes is a move on the side of conservatism. "The leaps in technology and the leaps in process are sufficiently challenging to go from a 5-inch to a 6-inch at the same time that you're going down to 0.5-micron, that AMI thought it was a much more prudent course for our customers for us to be a little bit less aggressive and have a higher confidence factor associated with successful implementation in bringing up that fab quickly."

Apart from the reliability issue, expected production volume from a 6-inch fab is sufficient to meet current customer requirements, besides having a shorter cycle time than 8-inch, he added.

Though it was suggested last year that AMI might accept equity investments in exchange for foundry capacity, there are currently no plans for the fab expansion to take that direction, but Mr. Blomquist still did not rule out the possibility.

"The decision (to expand) has been made without any of that outside funding made available, which is a very strong statement about the health of our business, to be able to self-fund an acquisition of capital that is equal roughly to 1X our annual sales--$200 million of revenue, which is our expectation for '95. At the same time, we will not be beholden, for at least the portion of this fab as it is currently conceived, to provide that to anyone."

AMI's four business sectors--silicon foundry services, digital ASICs, mixed-signal ASICs and standard products--are roughly equal as revenue generators, Mr. Blomquist said, adding that no single current customer exceeds 20 percent of total sales.