Could operational fabs for sale fill the MEMS capacity gap?

By Barney Silver, Senior Vice President & Principal, ATREG, Inc.

IHS iSuppli reports that the aggregate MEMS market is projected to grow at a compound annual growth rate (CAGR) of 10.5% between 2010 and 2015, with current predictions of 22% CAGR for consumer and mobile products alone (from $1.5 billion in 2010 to $4.4 billion in 2015). In 2010, pure-play MEMS foundries experienced a 48.4 % expansion, compared with only 2.4 % for standard semiconductor foundries.

With OEMs integrating MEMS devices into consumer, biomedical / quality of life, automotive, and industrial applications by the hundreds of millions, MEMS manufacturers need to keep pace with the robust global demand that is currently primarily driven by the explosive growth of smartphones and tablets. Gearing up for increased manufacturing capabilities and capacities can be a costly endeavor, and MEMS companies need to look at all available options to accelerate time-to-market while keeping costs down.

Purchasing an existing operational fab is one way to approach this challenge, especially 150mm or 200mm fabs running at less advanced geometry nodes. There are a variety of fully equipped operational fabs on the market right now that would make a cost-effective investment for a MEMS company. One perfect example of that is Texas Instruments that is selling its 150mm fabs in Hiji, Japan and Houston, TX. By acquiring an operational fab with ongoing production, MEMS companies can gradually introduce capacity into the fab without bearing the 100% of operational fab cost during the initial product qualification and ramp phases. As the seller’s production volumes decline over time, the buyer introduces incremental production capacity to maintain a healthy fab utilization rate.

I welcome your comments on this post at info@atreg.com.

About Barnett Silver

Barnett SilverAs a Senior Vice President and Principal with ATREG, Barney brings over 15 years of experience in finance, real estate, and investment banking. Barney works with ATREG’s clients across the semiconductor spectrum in Asia, Europe, and North America on acquisition, disposition, and complex strategy assignments. He has recently worked with Freescale Semiconductor, IDT, Qimonda, Renesas, Texas Instruments and TowerJazz. In addition to leading client assignments, Barney is responsible for the company’s operations, focused on developing new business opportunities and growing the ATREG platform. Click here to learn more.

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