Oh No! not another chip foundry alliance

Unprecedented? We think not

Four very big semiconductor companies are pooling their R&D budgets for the development of 32nanometer CMOS process technology.

The participants are Motorola, Philips, STMicroelectronics and - crucially - TSMC, the world's biggest chip foundry. The deal is for five years, and the Fab Four expect to spend $1.4bn by 2005 on the JV.

They say the deal is "unprecedented": we don't think so. Except for -maybe - Intel - all the major semiconductor makers are huddling together to share upstream costs. Also the new thing about this deal is Motorola - the other three already announced their intention to work together last month.

Under the deal, Motorola and TSMC gain access to a new Crolles 2, a new 300mm fab JVed by STMicro and Philips, in the French Alps. This will enable the companies to roll out product quickly. The inference is that volume production will transfer to individual operators, but plans can always change.

It's getting bloody expensive to build fabs, and the newest production techniques are bloody expensive to implement. The savings are downstream, when the small, cheaper chips are cut out of ever bigger wafers. ®