Analyst: Asian foundries jockeying for ST’s Phoenix fab

July 28, 2009 – A year after STMicroelectronics said it was shutting down several fabs worldwide to save money and carve out trailing-edge operations, it is said to be close to a deal to offload one of those sites to an Asian pure-play foundry, according to one analyst.

Bill McClean, president of Scottsdale, AZ-based IC Insights, says the latest rumor has ST in negotiations to sell its 200mm fab in Phoenix, AZ, to either China-based Grace Semiconductor or Singapore’s Chartered Semiconductor, with Chartered reportedly considered the front-runner. The Phoenix site, ST’s second 200mm fab after Crolles 1 and in production since 1995, had been flagged to be shut down over the next two years along with two other sites, a 150mm fab in Carrollton, TX, and a backend packaging/test facility in Morocco. At the time, ST said it would be too costly to upgrade the Phoenix site for long-term utilization, so the capacity would be shifted “directly or indirectly” to other facilities or subcons in Asia and Europe.

Now, though, McClean tells SST that buyout negotiations for the Phoenix site have heated up, and the rumored foundry buyers have good reason to be interested. “Most big fabless companies are located in the US,” he wrote in an e-mail exchange, so “it would be good for either of these foundries to be nearer their major customers.” Also, given the industry’s current tough environment on top of ST’s desire to unload the site, the Phoenix site, “although not state-of-the-art, will come very cheaply” to any buyer, which “may be able to buy it for 10 cents on the dollar,” he said. Furthermore, ST likely will give a sweetheart supply deal to whomever buys the fab to keep the lines running, he added.

200mm chipmaking operations have been one of the few bright spots in the chip industry’s currently sluggish environment. Chartered earlier this year bought 100% ownership of Hitachi’s Singapore unit, adding a 200mm fab and “incremental” capacity to its four existing 200mm facilities. And TSMC has been eager to add more 200mm capacity in the past year, approving investments in Taiwan and Europe. In fact, demand for 200mm operations has been a key factor in Taiwan firms’ hesitancy to uproot those facilities and transfer them to mainland China amid sweeping liberalization of business and technology regulations.


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