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Chip Makers Gearing Up To Meet Growing Demand

A flurry of recent reports indicates that U.S. chip makers are preparing for growing demand by expanding their offshore manufacturing operations.
Last year, Intel and a Chinese startup struck a deal on the transfer of manufacturing technology and equipment, believed to be the first such deal that the CPU giant made in China. The company licensed 0.35 and 0.25 micron CMOS process technology to Nanotech Corp., based outside of Shanghai in Changzhou, Jiangsu Province (see June 22, 2004 story).

Intel already operates three assembly and testing factories at a site in the Shanghai Pudong New Area in eastern China. In March, the company announced plans to construct a second assembly and testing factory in the municipality of Chengdu in China's Sichuan Province (see March 23 story).

Offshore blitz

Meanwhile, reports out of Germany quoted AMD CEO Hector Ruiz as saying the chip maker needs to expand its fab operations to meet growing demand and that its Dresden operation is the leading candidate. A decision on AMD's fab expansion plans is expected by mid-2006, according to reports.

The flurry of fab expansion reports comes as chip makers are bracing for growing global demand that is expected to be fueled by consumer applicatons like multimedia 3G phones and other mobile applications.

An industry sector girding for exploding demand as more features are added to mobile phones is the memory business. One industry executive warned here this week of future memory shortages if vendors stumble in the efforts to shift between NAND and NOR flash memory technologies.

"We're moving from the mobile decade to the mobile consumer decade," Jon Kang, senior vice president of technology marketing for Samsung Semiconductor, told the Design Automation Conference here this week. Kang said the proliferation of mobile devices coupled with the emergence of gadget-filled 3G phones will sharply increase demand for memory.

Hence, memory makers are also looking to expand their operations while scaling down their memory technologies for emerging consumer applications.

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Brian T. Horowitz, Contributing Reporter
Samuel Greengard, Contributing Reporter
Nathan Eddy, Freelance Writer
Brandon Taylor, Digital Editorial Program Manager
Jessica Davis, Senior Editor
Cynthia Harvey, Freelance Journalist, InformationWeek
Sara Peters, Editor-in-Chief, InformationWeek / Network Computing