Flanders eyes fabs

Electronic News, Feb 9, 1998 by Dylan McGrath

Santa Clara, Calif.--The government of Flanders, the Northern state in Belgium, has sweetened the pot in its quest to land a semiconductor company to build a fab or group of fabs in Flanders. The opportunity now includes two fully integrated site designs, an unusual partnership opportunity and a financial and fiscal incentives package that the Flanders Foreign Investment Office (FFIO) says is worth about 60 percent of the total investment a company would make there.

The FFIO, which has been trying to lure a major semiconductor manufacturer to Flanders since at least early 1997, upped the ante recently when it recruited a facility engineering company, Meissner Wurst (M W), that has participated in dozens of semiconductor manufacturing facility projects. After evaluating two suitable sites in the Limburg province of Flanders, M W and AMA, a Singapore-based architectural firm, designed two 100-acre science parks capable of accommodating up to six cleanrooms each. Although any company interested in the project is welcome to modify the layout of the facilities, a viable and practical group of fabs has already been theoretically laid out.

M W and the FFIO have also begun the process of obtaining a permit for a potential taker, a lengthy and painful undertaking in Western Europe. "Although we don't know who will be the semiconductor company coming in, the permit will be waiting for them," said Roger De Keersmaecker, director of the integrated circuit (IC) project for the FFIO and a project manager for IMEC, a semiconductor research consortium located in Flanders.

Perhaps the most interesting aspect of the proposal is a possible partnership between the semiconductor company and M W. Under this proposal, a semiconductor company could come in and produce devices in anywhere between one and six fabs which would be built and managed by M W. M W would then bill the semiconductor company regularly---one rate for everything involved. The FFIO apparently developed this plan after listening to semiconductor company executives complain that the soaring cost of fabs would force them to partner with other companies in the 300mm era.

"We believe these technology partnerships do not have to be between two semiconductor companies," said John Hedlund, VP of Europe for M W. "They can be between one company who will produce the silicon and one organization who will be responsible for the facility and the facility management." According to Messrs. Hedlund and De Keersmaecker, a number of financial institutions are already interested in financing the deal. All they need now is a semiconductor company to sign on the dotted line. "I feel that as time goes on, more companies and countries will look to this type of a solution," Mr. Hedlund said.

"I think this model will give us an edge over other regions trying to lure semiconductor companies," Mr. De Keersmaecker said. With Asia, at least for the time being, not considered a great place to build a fab, European countries, particularly the United Kingdom, are providing stiff competition. But according to the FFIO, Flanders has advantages beyond its novel model.

For starters, it is located in central Europe, in proximity of major industrial centers in Germany, France and the U.K. It has a well-educated population (a recent Economist article ranked the Flanders school system fifth in mathematics and 11th in science, worlwide), and double-digit unemployment. The area includes plenty of engineers, Mr. De Keersmaecker said, for companies to chose from. According to him, many of those engineers now work in local design centers or commute to fabs in Germany.

The proximity to fabs run by Phillips, Mitsubishi, Actel and others means a healthy complement of equipment suppliers are nearby. In addition, the FFIO trumpets virtually every aspect of Flanders, from its well-ranked health care system to its quality of life. "I like to say we live like the French but work like the Germans," Mr. De Keersmaecker said.

The financial incentives being offered include: a cash grant equal to 25 percent of the total investment, tax deductions, leasing schemes, subsidized employment training and related incentives--all adding up to what is, according to the FFIO, 60 percent of the total initial investment a company would need to lay out.

Despite the incentives, there are no takers so far. Last week, Messrs. De Keersmaecker and Hedlund were here in Santa Clara to lead a team that included an AMA representative and a representative from U.K.-based M W Pearce to present the current proposal to semiconductor executives (and show a model of one of the sites). They said they are in discussions with several American and European companies but declined to name names yet.

With the recent financial troubles in Asia, many analysts are predicting companies will be cautious about capital investments, at least for the first part of 1998. But Mr. Hedlund believes the Asian financial crisis may be an encouragement for companies to set up a European fab.