Chartered, IBM Trade Resources

By Tom Murphy -- 11/26/2002

The sagging fortunes of Chartered Semiconductor Manufacturing received a major shot in the arm today when it announced a technology agreement with IBM Microelectronics for technology and capacity.

Singapore-based Chartered had been the hardest hit out of all the major contract foundries. It suffered from the lowest factory utilization rate industry-wide and repeatedly racked up losses. Chartered's capital expenditure budget also continued to shrink. But now IBM will help Chartered migrate to 90nm, 65nm and 300mm wafer processing in return for foundry capacity.

Chartered had faced the prospect of losing key business to start up foundries and market leaders Taiwan Semiconductor Manufacturing Co. Ltd. and United Microelectronics Corp. before this agreement was reached. Chartered’s migration to more advanced process technologies had been severely curtailed because of meager capital spending limits. Meanwhile, the major players from Taiwan had each struck deals with key integrated devices manufacturers to jointly develop more advanced process technologies.

In return for the technology transfer, IBM will receive foundry capacity at Chartered, which is key for Big Blue’s expanded offering on foundry services. In the past, IBM’s foundry customers were dismayed when they were pushed out of the fab by the company’s own internal products.

"This puts us in first pass for design wins for 90nm," said Michael Buehler-Garcia, VP of marketing for Chartered. "What it gives our customer base is more choice and flexibility. We are all tied up with the competition for our customers who want access to the leading edge. It opens more choices for the market."

Buehler-Garcia said the agreement adds legitimacy to IBM’s endeavor to become more of a prominent foundry player. It will provide their foundry and process technology with a second source in the market, he said.

Chartered says its customers will have access to capacity at IBM’s 90nm process technology at Burlington, Vt., by Q3 of next year. It pulls in Chartered’s schedule by at least three quarters, Buehler-Garcia said. Chartered plans to push out construction of its Fab 7 project in Singapore, allowing it to stretch out its capital expenditure burden.

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