Already a partner of Grace Semiconductor Manufacturing Corp., Cypress is turning to UMC to help solidify its "fab lite" strategy, something Cypress pithily labels "No More Moore." It's also an important move to shore up outsourced capacity at the leading edge, where much of its new SRAM resides. This will be the first time Cypress farms out production of its flagship SRAM products, noted Shahin Sharifzadeh, executive vice president of manufacturing and technology at Cypress.

The company is also looking for more foundry partners in Asia, and would consider selling its remaining fabs in Round Rock, Texas (150mm), and Bloomington, Minn. (200mm).

"It is an option that we are looking at," Sharifzadeh said. "As our revenue grows we don't expect to add any more capacity to our internal fabs so all of the growth is going to happen with our (foundry) partners."

A few weeks ago, Cypress agreed to sell its R&D fab unit, the Silicon Valley Technology Center (SVTC), to private equity firms Oak Hill Capital Partners and Tallwood Venture Capital for approximately $53 million in cash.

Although Cypress is clearly slimming down its manufacturing arm, holding on to the US fabs a little longer may make sense. The Texas fab, which is nearly depreciated, runs high-margin products on proprietary processes. And after a technology upgrade in 2001, the Minnesota fab still has some legs and will reach full depreciation in about 18 months.

In 2005, Cypress initiated its foray into foundry services by inking a deal with Shanghai-based Grace, also called known as GSMC. Cypress recently signed off on a 0.40 micron process for its mixed-signal programmable system on chip (PSoC) and is in the process of shifting its 0.13 micron process to Grace. But the foundry isn't capable of 65-nm so Cypress had to look elsewhere.

UMC was a good fit. The companies have worked together before, via proxy — a few companies Cypress acquired were already running wafers at UMC. Cypress also plans to shift its S8 0.13-micron embedded flash technology and two future generations of embedded flash technology to UMC in order to produce other Cypress products, including its PSoC and USB devices. The transfer begins in the second half, and Cypress hopes to see product qualification and production later in 2008.

By: DocMemory
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