Freescale Joins IBM's 'Fab Club'Freescale Joins IBM's 'Fab Club'

SAN JOSE, Calif. — In a major change of direction, Freescale Semiconductor Inc. on Tuesday (Jan. 23) announced plans that it will join IBM Corp.'s ''fab club'' for joint semiconductor research and development.

The move appears to be perhaps another nail in the coffin for the troubled Crolles2 Alliance, which is on shaky ground right now. It also raises questions about Freescale's deals with its current silicon foundry partners, such as Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC) and United Microelectronics Corp. (UMC).

Under its new R&D strategy, Freescale (Austin, Texas) will become a partner in IBM's technology alliance starting at the 45-nm node. Freescale will also participate in the R&D alliance at the 32- and 22-nm nodes and beyond.

The agreement includes the development of CMOS and silicon-on-insulator (SOI) technologies. In addition to leveraging its own fabs and its existing relationships with leading foundry manufacturers, Freescale will have access to the combined manufacturing capacity of IBM's ''common platform'' partners. Those partners include IBM, Chartered, Infineon and Samsung.

By partnering with IBM, however, Freescale is switching gears on several fronts, including SOI and its overall R&D roadmap. Originally, Freescale was banking on its future semiconductor R&D at the now-troubled Crolles2 Alliance.

Crolles2 is a high-profile alliance created in 2000 in Crolles, France, by STMicroelectronics Inc. and Philips Semiconductors (now NXP). Two years later, Freescale joined to collaborate on the research, development and industrialization of CMOS process technologies, beginning at 90-nm and ultimately attaining the 32-nm node. Also that year, TSMC joined as an associate partner.

But last week, the alliance began to unravel when NXP (Eindhoven, Netherlands) disclosed that it would not extend its participation beyond the term expiring at the end of 2007. Instead, NXP has decided to expand its ties with longtime foundry partner TSMC (Hsinchu, Taiwan).

Officials from Freescale insisted that the company is not exactly bailing out of the alliance, which consists of two components: R&D and IC manufacturing. It is still unclear what direction Freescale will take in the manufacturing portion of the contract at Crolles2, which has a small-scale, 300-mm fab.

The R&D portion of the contract runs out at the end of this year. Even before that, Freescale plans to embrace the R&D from IBM's technology alliance and for good reason.

''Freescale is going to the IBM alliance,'' said Sumit Sadana, senior vice president of strategy and business development and acting chief technology for Freescale. The IBM alliance provides ''levels of investment significantly higher than what we could have accomplished at Crolles2.''

In addition, Freescale is moving in another direction for SOI. Previously, the chip maker developed and implemented its own, proprietary SOI for its networking devices. But at the 45-nm node and beyond, Freescale will embrace and help devise SOI technology jointly developed by the IBM technology alliance, he said.

''This partnership creates an exciting opportunity to combine the complementary strengths of Freescale and the IBM Alliance,'' Sadana said. ''This industry-leading technology roadmap will enable Freescale to deliver substantial value to our customers.''

"Freescale's addition to the IBM technology alliance is a significant vote of confidence for IBM's collaborative model and the work we are doing jointly with our technology partners," said Lisa Su, vice president of semiconductor research and development at IBM.

Sadana did not elaborate on Freescale's manufacturing strategy, which is characterized as a so-called "fab-lite" model. He insisted that Freescale will continue to work with TSMC and UMC despite joining the IBM ''fab club.''

At present, Freescale outsources about 20-to-25 percent of its chip production to the foundries, namely TSMC and UMC. The rest is produced in-house within its various fabs.

But at the 45-nm node and beyond, however, it is widely believed that Freescale will have most of its chips made at the foundries within the IBM ''fab club.''

The Freescale technologist also insisted that the company's recent private-equity buyout had nothing to do with its new technology directions. Stockholders of Freescale Semiconductor last year approved the previously announced acquisition of the chip maker by a consortium of private equity firms. As reported, the buyout was led by The Blackstone Group and including The Carlyle Group, Permira Funds and Texas Pacific Group.