Debate rages over future of U.S. fabs

TechOnline India - July 28, 2010

The debate continues over the demise of chip manufacturing—and the lack of solar fabs-in the United States.

SAN FRANCISCO – The debate continues over the demise of chip manufacturing—and the lack of solar fabs-in the United States.

Except in a few cases, the party is nearly over in terms of new and leading-edge chip and solar fabs being built in the U.S., some argue. However, one investment firm, Turner Investment Partners (Berwyn, Penn.), recently made a bold statement: “The state of U.S. manufacturing is quite healthy and appears likely to remain so for a long time to come.”

The firm acknowledged trends that encourage the misconception that U.S. manufacturing is on the verge of extinction, but it makes the case that manufacturing in the U.S. ''is only changing, not dying.’’

This includes the semiconductor and fab tool areas. The firm cited and hailed the U.S. production bases for Intel, Micron, and Varian Semiconductor Equipment Associates.

Approximately 286,000 manufacturing firms currently operate in the U.S. and produce 22 percent of global manufacturing output, the largest percentage of any country, according to the firm.

At the recent Semicon West trade show here, there is a different and depressing sentiment: U.S. chip manufacturing continues to be on the wane and will never come back. And solar fabs are becoming rare in the domestic market.

For years, chip makers have built fewer and fewer fabs in the United States. IC makers have moved to cut their manufacturing costs, by shifting a large percentage of their production to foundries in Asia and elsewhere. Many chip makers are moving toward fab-lite or fabless strategies.

“Outside of Intel, I don’t see a lot of new green field fabs in the U.S.,’’ said Joe Cestari, president of Total Facility Solutions (TFS). Solar projects ''are slow in the U.S.’’

TFS is a subsidiary of M+W U.S. Inc. It provides turnkey facilities for the semiconductor, solar and other industries.

There are many solar fabs being built--or in production--in the U.S. Still, an alarming amount of production is coming offshore, analysts said.

This is also true for ICs. Intel Corp. and GlobalFoundries Inc. will likely build perhaps the last leading-edge chip fabs in the United States. GlobalFoundries is building a leading-edge, 300-mm fab in upstate New York.

Intel has several 300-mm fabs in the U.S. One day, the chip giant may build a 450-mm fab in the U.S.

Analog fabs are alive and well in the U.S. Texas Instruments Inc. is expected to ramp up the world’s first 300-mm analog fab in Texas by year’s end. Linear Technology Corp. is mulling plans to build a 6-inch fab in Washington state.

Needless to say, the fab action is in Asia. In Asia, M+W has built some 70 percent of the 300-mm fabs in that region, Cestari said.But amid the outsouring trends, coupled by the wild IC cycles, M+W has diversified over the years into data centers, energy, life sciences and other sectors.

Just this year alone, the company has been on an acquisition spree as a mean to diversify. In January, M+W Process Automation GmbH acquired 70 percent of the shares in Teufel Software GmbH, a SAP systems house for medium-sized manufacturing companies.

A month later, the company announced that its subsidiary, M+W Americas, purchased 100 percent of Global Automation Partners (GAP). With the acquisition, M+W will expand its competencies for customers of FDA regulated industries like pharmaceuticals, biotech and specialty chemicals.

Earlier this year, M+W acquired shares in Schmid Silicon Technology Holding GmbH. With this acquisition, M+W Group partners with Schmid Silicon in its worldwide activities for engineering and construction of polysilicon plants based on its monosilane technology.

M+W continues to invest in the U.S. The company recently announced that its subsidiary, M+W Americas, purchased 100 percent of NStar Global Services. The purchase price was not disclosed. The company specializes in providing contract service resources to the semiconductor and high-tech industries.

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