October 14, 2004 – Toshiba Corp. will fabricate semiconductors for midsize US chipmaker Xilinx Inc. using the latest 90nm processing technology, The Nihon Keizai Shimbun learned Wednesday.

Xilinx, which has no production facilities of its own, develops chips called FPGAs (field-programmable gate arrays) that allow the chips to be modified through programming.

The California-based firm had been outsourcing production mainly to major Taiwanese semiconductor foundry United Microelectronics Corp. (UMC). Although UMC is contracted to make the chips using cutting-edge 90nm technology, difficulties in improving the yield of usable chips has caused the US firm to seek a partnership with Toshiba.

Toshiba plans to start production for Xilinx around the beginning of 2005 at a new facility at its Oita Prefecture plant that is capable of handling 300mm wafers. It expects to generate sales of 20-30 billion yen annually in three years.

As an advance payment for the chips, Xilinx will provide about 10 billion yen to Toshiba, which will spend it on facilities. The major Japanese electronics company hopes to receive production orders from several other firms as well.

Toshiba logged about 900 billion yen in group sales from its semiconductor operations in fiscal 2003.

Moves to create production structures that are more resilient to demand volatility are spreading. Another major Japanese chipmaker, Fujitsu Ltd., has signed a similar deal with a US company.