Fabs That Refuse To Die

Semiconductor fabs are interesting operations.  You invest a billion or so into the most advanced manufacturing technology available, then it becomes obsolete in less than a decade.  Some simply close and some continue to make lower tech products and accept their second or even third class status.

Don’t you just hate it when you spend $1 billion building something, only to find out it’s obsolete within a decade? That’s the fate of semiconductor managers who have old manufacturing facilities filled with old equipment. The question is how to make the best of a very expensive problem.

Surprisingly, if an older fab is retrofitted it generally doesn’t go on to make photovoltaic chips or become a nanomanufacturing center. In many cases, the fabs continue to make chips, but those that require less cutting-edge technology.

And some try a different path in the hopes of remaining competitive.

Surprisingly, most of the older 200mm fabrication plants are still in use and will remain so for a long time. The key is for the people running them to find products that can be made on older technologies while staying cost effective. Freescale Semiconductor started to revamp processes at its 17-year-old Oakhill fab in the third quarter of last year. That effort should end in mid-2009 and result in more than 30 different products lines being manufactured at the fab. Chris Magnella, the facility’s director of operations, says his goal is to remain competitive with the manufacturing costs of more advanced plants in other countries.

How does he aim to pull that off?

To meet that challenge, he’s selected a mix of products that benefit from being made at 200mm wafers, such as MEMs chips, as well as high-voltage power management chips. Additionally, he’s using equipment that’s incredibly old, trying to keep the costs associated with fab operations down. Magnella declines to make big investments in technology at the fab that won’t pay for themselves in a year or less, and he’s embraced a lean manufacturing ethos that pushes the employees to innovate.

Basically creating a competitive advantage by being different.  A sprinkling of lean doesn't hurt either.