Freescale Seeks Growth After Tepid 2007
David Lammers, News Editor -- Semiconductor International, 1/31/2008 7:04:00 AM
Freescale Semiconductor Inc. (Austin, Texas) executives said yesterday that manufacturing capacity utilization has dropped to ~75% from >90% a year ago, the result of slumping wireless IC sales to Motorola Inc. (Schaumburg, Ill.) and equally poor demand from Detroit for Freescale’s automotive ICs.
Freescale CFO Alan Campbell said, “In 2008, we do have a plan to improve our utilization,” adding that the company now sources ~15% of its silicon from foundries. “We do have that lever also,” Campbell said, implying that some production could be pulled into internal fabs.
In a conference call following the release of earnings, Campbell said Freescale will keep its 2008 capital expenditures at the relatively modest level of 6% of revenues, consistent with 2007.
Freescale has assets to dispose, with plans to sell equipment and other assets from the Crolles, France, development fab, a 300 mm facility now used exclusively by STMicroelectronics Inc. (Geneva). Campbell said Freescale is “looking at its options” for the East Kilbride, Scotland, fab, a 150 mm wafer fab that went up for sale last autumn.
A gallium arsenide (GaAs) fab in Tempe, Ariz., is also for sale, Campbell said, following Freescale’s sale of its GaAs-based RF power amplifier (PA) business to Skyworks Solutions Inc. (Woburn, Mass.) last October. Freescale spokesman Glaston Ford said that the deal with Skyworks calls for Freescale to transfer its PA designs and intellectual property (IP) to Skyworks, as well as inventory.
The Tempe “CS-1” fab is a 150 mm GaAs wafer manufacturing facility with 38,000 ft2 of space, which started production in 1991. The spokesman said that as part of the Skyworks deal, Freescale retained certain assets, such as the buildings, property and some equipment, adding that “the factory continues to operate.”
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| Michel Mayer, CEO of Freescale Semiconductor |
Freescale, the former Motorola semiconductor products sector (SPS), was acquired by a private equity consortium led by the Blackstone Group in September 2006 for $17.6B. Since then, revenues have been flat and the company has sought to reduce costs, laying off ~700 people last year. Sales in its networking, microcontroller and automotive IC units have been steady, showing little growth, while wireless IC sales have sharply dropped.
Mayer said Freescale may soon be able to announce a major wireless IC design. “We don’t want to reduce our research and development in the wireless area. That would impact the heart of our roadmap. We believe we should see, by this summer, shipments from a new design win that we have been working very hard on.”
In the automotive sector, Mayer said Freescale has “by far the largest market share among the Big Three in the United States, and everyone knows the struggles there. You can imagine that our U.S. automotive IC business has not been flamboyant.”
