The move to 300-mm wafers is starting to pay off big for the two leading programmable logic companies. But its effect on easing the capacity crunch is still a mixed bag.

At Xilinx, 50 percent of the products built by foundry partner United Microelectronics Corp. are from 300-mm wafers. The company expects that to reach 60 percent of total production by year's end.

"We have achieved defect densities better than we ever have achieved on 200 millimeters," said Xilinx president and CEO Willem Roelandts during a conference call with financial analysts. "I think we have the bulk of the benefits for our mainline products in the bag."

A similar story is playing out at Altera. Of Altera's 0.13-micron products shipped last quarter, 42 percent were made on 300-mm wafers This quarter, 95 percent of the production for those products will shift to the larger wafers, said Altera president and CEO John Daane, in a recent conference call.

"Our move to 300 mm continues flawlessly, and we have achieved [a] cost crossover point," he said.

The benefit of moving to the larger wafers has contributed to higher gross margins for both companies. Altera's gross margins climbed to 68.8 percent; Xilinx's rose to 64.7 percent, its highest in eight years.

The higher gross margins were driven by a sharp jump in revenues for both companies last quarter, which was marked by strong demand for their newer devices from consumer, communications and industrial customers.

Xilinx's revenue last quarter hit $403.4 million, a 10- percent jump over previous quarter. Altera reported that sales increased 12 percent to $242.9 million.

Despite higher bookings in recent weeks, the companies are being cautious about their sales predictions for the June quarter, and are keeping their growth forecasts to below 10 percent. Both, however, said they are boosting their own inventories and those of their distributors.

The two companies have different outlooks for production capacity. Altera said it does not anticipate any significant disruptions in output from Taiwan Semiconductor Manufacturing Co. Ltd., even though the foundry has said its production capacity is oversubscribed.

"There is nothing happening with our supplier base that has me feeling uncomfortable about our ability to get material to fulfill customer demand," Daane said.

Roelandts said Xilinx didn't expect demand last quarter to be so strong, and couldn't increase production to keep pace. That caused delinquencies to rise by 2 percent. "It has been rocky because we didn't have as much at the beginning as at the end but we were able to meet most of customer demand during the quarter," he said.

The company expects production capacity to remain tight, though it is working with its suppliers to access more capacity and improve yields, Roelandts said.

By: DocMemory
Copyright © 2023 CST, Inc. All Rights Reserved