"Most OEM companies will make 45nm products at foundries"

On the sidelines of the recent inauguration of Infineon’s fab at Kulim, Malaysia, EDN Asia spoke to Dr Wolfgang Ziebart, President & CEO, and Dr Reinhard Ploss, Corporate Senior Vice President & General Manager, Infineon Technologies AG; and Tan Soo Hee, Managing Director, Infineon Technologies (Kulim) Sdn Bhd. Excerpts:

Qns: Infineon and its alliance partners seemed to be in a hurry to reach 45nm node when 90nm and 65nm have still not been fully exploited commercially. Any comment?

Ans: Offering 45nm design kits means that we have shown our capability of designing at that node. The key to early learning is to reach the next technological node faster. Some years ago 70 percent of overall semiconductor designs were in the last two technological nodes. This figure has come down to 40 to 45 percent, which shows how rapidly the market is moving towards the latest technology. Those companies that reach the latest node early have an advantage.
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Qns: Will Infineon be making the huge investment required in a fab to produce 45nm products?

Ans: No. Very few OEM companies, such as Intel, would go for their own fabs, because the investment required is very huge. Most will get their 45nm products made at foundries.

Qns: How do you justify Infineon setting up a new fab in Malaysia when the two existing foundries, 1st Silicon and Silterra, do not seem to be doing well?

Ans: We do not comment upon the performance of other companies. We see no reason why our fab should not succeed. To be successful, a fab should operate at 100 percent of its capacity most of the time. Our products at the Kulim plant are already sold. We shall have a yield of over 95 percent. Our business model is different from that of 1st Silicon and Silterra. We focus on applications in various verticals rather than on a product category. Currently our focus is on automotive, power, and industrial electronic segments. We are confident that the continued growth in these segments will keep our fab healthy.

Qns: The trend seems to be for OEMs to outsource semiconductor manufacturing to foundries. But you have chosen to build a fab. Any comment?

In advanced logic nodes the foundry model has been successful, but in some areas, especially power and analog, this model has not been as successful. When the relationship between design and manufacturing is very intricate, the foundry model does not seem to work successfully. We shall continue to make in our own fabs products that we believe we can make better than foundries.

Qns: What are your investment plans for Asia?

Ans: Costs are high in Germany and we want to take advantage of the low-cost regions in Asia with high expertise. In 2006 we invested Euro 1.3 billion in Asia, mainly in Malaysia and Singapore.

Qns: How do you perceive yourself as a regional player in Asia?

Ans: The semiconductor business is global in nature. There is no such thing as a regional player. We perceive ourselves as a global player with a mission to succeed all over the world.

Qns: Some time back there were reports about Infineon shifting its headquarters to some other country because of high costs in Germany. Any comment?

Ans: These reports are baseless. The Company’s headquarters will continue to be in Germany.

You can reach Kirtimaya Varma at kirti.varma@rbi-asia.com