Xilinx antes up $300M for fab to Seiko-Epson

Electronic News, May 27, 1996 by Crista Hardie

Mountain View, Calif.--As part of its efforts to step up sales of programmable logic devices, Xilinx is strengthening ties with its main manufacturing partner Seiko-Epson, fronting the Japanese foundry a substantial sum of money toward construction of a new wafer fabrication facility. The companies will also co-develop processes for higher-density field programmable gate arrays (FPGAs), which is a key piece of Xilinx marketing strategy (see story, page 46).

In a separate development, Motorola and Siemens last week nailed down a site near Richmond, Va., for a $1.5 billion jointly owned and operated memory manufacturing company announced last fall (EN, Oct. 30, 1995). Both companies already have a manufacturing presence in the tobacco state; however, the factory will be Siemens' first major U.S. semiconductor manufacturing facility.

Meanwhile, TriQuint Semiconductor secured $45 million in financing for the construction of its 187,000-square-foot semiconductor manufacturing and office complex in Hillsboro, Ore., which officially breaks ground in early July. The company obtained a five-year operating lease through Wolverine Leasing Corp. with financing provided by U.S. Bank.

Programmable logic leader Xilinx said last week it will provide Seiko-Epson with up to $300 million in advance payments on future wafer deliveries. The money will partially fund Seiko-Epson's fab expansion in Sakata, Japan, which was scheduled to break ground Friday. Seiko did not reveal whether other partners would also help fund the construction.

The agreement calls for Xilinx to make incremental advance payments to Seiko-Epson over the next two and a half years. In return, the foundry will guarantee delivery of a specified number of 200-millimeter (eight-inch) silicon wafers from the new production line from 1998 through 2002.

According to Xilinx, 0.35- to 0.25-micron CMOS manufacturing processes will be developed as part of the relationship, allowing Xilinx over time to quadruple the density of its programmable logic devices into the range of a half-million gates. Smaller device geometries, coupled with the migration from 150mm (six-inch) to 200mm wafers, will provide Xilinx a substantial boost in production, although the company declined to quantify the expected increase.

Seiko-Epson offers access to its wafer fabs through equity investment, license agreements and its ASIC programs. Xilinx has maintained the foundry as its main wafer source for the past 10 years. In 1994, Xilinx entered into a $42 million agreement to invest in Seiko-Epson's 150mm wafer facility in Sakata, Japan. Lattice Semiconductor and Brooktree Corp. have entered similar deals with Seiko-Epson.

It is thought that Seiko also obtained non-exclusive rights to sell Xilinx FPGAs in Europe and Asia, although a Xilinx spokesman could not confirm that.

"We're confident that our continuing partnership with Seiko Epson will enhance our competitive position and allow us to design products with ever higher densities and faster performance. Just as important, it will help us meet growing customer demand worldwide for our products into the next century," said Xilinx CEO Willem Roelandts.

Meanwhile, the company maintains a variety of foundry arrangements to ensure adequate supply of wafers, including non-equity relationships with Yamaha, Taiwan Semiconductor Manufacturing Co. (TSMC) and IC Works. Last year, the company entered into its first equity partnership with United Microelectronics Corp. (UMC) in Taiwan, contributing $150 million for a 25 percent stake in a $1 billion factory currently under construction. That arrangement is expected to provide Xilinx with wafers through 2000 (EN, Oct. 30, 1995).

Separately, Motorola's Semiconductor Products Sector and Siemens Semiconductor Group selected a site 14 miles outside of Richmond, Va., to construct a $1.5 billion joint venture factory for 64- and 256-megabit DRAMs.

The development will be Siemens' first major semiconductor factory in the U.S., although the company operates an automotive components plant in Newport News, Va. The company has stated the joint venture is part of a strategy to globalize its operations and be closer to its customers.

As for Motorola, "We are re-emphasizing our long-term commitment to the DRAM market, and our belief that Virginia and the greater Richmond area is a superb place to create and conduct business," said Thomas George, president of Motorola SPS.

Using DRAM technology gleaned from an R&D partnership among Motorola, Siemens, IBM and Toshiba, White Oak Semiconductor--as the Motorola-Siemens joint venture will be known--will produce about 10,000 200mm wafers per week using 0.35-micron feature sizes and scaling down to smaller geometries as the technology advances.

Construction of the 600,000-square-foot complex is slated to begin in 4Q96, with initial production of 64M DRAMs by mid-1998. At full production, the facility is expected to employ 1,000-1,500 people.

IBM and Toshiba, the other partners in the advanced DRAM R&D consortium, are building their own DRAM fab in Manassas, Va. (EN, Aug. 14, 1995). Motorola is also building a fab in West Creek, Va., for production of the PowerPC microprocessor (EN, Sept. 11, 1995); it will be known as MOS 19.