After months---OK, a month or so---of speculation (including in Chip Shots' November 2 posting), Cypress Semi spinoff SVTC and Sematech subsidiary ATDF have finally announced their merger, creating what is probably the world's largest development foundry operation.
But many terms of the deal, such as the eventual name of the combined company, transactional dollar amounts, and whether it's really a merger or an acquisition, won't be known until the whole enchilada closes by year's end...and in some cases, even later.
During a phone-in press conference, SVTC CEO Dave Bergeron would not acknowledge if SVTC is in fact the more equal of the equals in this "complimentary" merger of equals, although he did say that he will be CEO of the combined operation and Dave Anderson will remain GM of ATDF. He also explained that the two parties will continue to use their respective names, at least for awhile, although that could change in the future. The merged two-fab entity will boast more than 200 customers, over 2000 processes, and 300 or so pieces of equipment, according to Bergeron, and the employee headcount could actually increase.
The combined customer base, which ranges from start-up/early stagers to large IDMs, has expanded well beyond traditional CMOS-type customers, with MEMS, photovoltaic solar cell, novel memory device, nanowidget, and high-voltage/analog project wafers in the foundries' flows. "These customers need the process stability, uniformity, and control that mature semiconductor tools have," noted Bergeron. With SVTC's (and now ATDF's) inherently customizable payment model, some customers choose to pay for the IP-protected, shared-access development services on the basis of capacity, others select a tool-based costing scheme, while others seek a more activity-based plan.
When asked what the two outfits' complimentary strengths are, Bergeron said that ATDF has a more technology-oriented approach, in areas such as copper interconnect, atomic-layer deposition, and epitaxial growth, while SVTC brings a more production-oriented service, with lots of statistical process control and expertise in transferring processes to volume manufacturers. Anderson agreed with those assessments, noting ATDF's Sematech pedigree in technology development and focus on new device structures. In other words, ATDF brings a bit more prowess in "R" and SVTC contributes more "D" muscle to the marriage.
Citing ATDF's tech edge, Bergeron explained that "SVTC needed that expertise for its customers," and offered an example of an SVTC customer who uses the development fab for FEOL work with its current aluminum back end of line, but its roadmap requires copper BEOL, a specialty that ATDF offers in spades.
His response to this question and to several others also hinted at the possible "more equal" status of SVTC in the merger, since his answers sounded like those of the CEO of an acquiring company picking up needed/missing assets or capabilities from the acquiree. SVTC also has significant financial wherewithal in the form of its Tallwood and Oak Hill investors, something which also suggests its likely preeminent role in the pairing.
Toward the end of the press conference, Bergeron was asked whether more acquisitions/mergers/partnerships might be on the way. "Strategically, the environment is changing," he replied. "We have been asked by our customers to consider different, expansive business models going forward."
He speculated about possible scenarios such as managing large companies' R&D fabs. He said the company would like to "extend MEMS, mixed-signal, and PV services" and continue to work with CMP, analytical/characterization, and other process-module developers/outsourcers, "getting help where we need it." Bergeron wants the conjoined companies to "provide the central focus, to be the commercialization go-to guys. If that means partnering, we'll do that; if that means moving wafers around the world, we'll do that.... Process differentiation products is what we're servicing."
Considering that the R&D/process development foundry concept is only a few years old, this intriguing and increasingly popular business model has evolved rapidly. With two of the main players soon merged as one, the market will take another maturation step, and semiconductor and nonsemi customers alike should benefit from the resulting synergies.
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