Texas Instruments Buys Chip Plants In Japan From Spansion Unit

The Wall Street Journal

Texas Instruments Inc. (TI) said Wednesday it will purchase two semiconductor wafer manufacturing plants and equipment in Japan from a unit of Spansion Inc. (SPSNQ) to boost capacity for chips used in a variety of electronic gadgets.

Financial terms of the transaction weren't disclosed.

In a statement, the U.S. chip maker said it will buy a 200-millimeter wafer fab currently in operation in Aizu-Wakamatsu, Japan, that is capable of expanding Texas Instrument's analog revenue by more than $1 billion. The second facility will be either a 200-millimeter or 300-millimeter fab, it said.

A plant using 300-millimeter wafers is more advanced than a 200-millimeter wafer plant, cutting a chip maker's manufacturing costs by as much as 30%.

"This acquisition is the most recent in a series of analog manufacturing expansions announced by TI over the past 24 months which collectively will add capacity for more than $3.5 billion of additional analog revenue per year when fully operational," the company said.

Chip makers globally are expanding capacity this year as demand improves along with the recovery in the global economy. Demand has been stronger than expected thanks to the emergence of new applications such as smartphones, e-readers and tablet PCs in which chips are widely used. Texas Instruments' rivals Intel Corp. and Samsung Electronics Co. have been posting strong earnings in the most recent quarter, thanks to a rebound in demand and higher prices.

The company said it will offer employment to a majority of Spansion Japan Ltd. employees in Aizu-Wakamatsu, Japan, where the facilities are based. It plans to run the first fab and preserve the second facility for future capacity expansion, it said.

The company's analog chips are widely used in set-top boxes, electronic books and smartphones.

Based in Sunnyvale, Calif., Spansion filed for bankruptcy protection in March 2009, weighed down by $1.5 billion in debt. The company, which makes flash-memory chips used to store data in iPods and digital cameras, exited bankruptcy in May.

Texas Instruments To Open New U.S. Chip Plant

From the Business Review

After nearly five years of waiting, Richardson, Texas, will see the opening of a 1.1-million-square-foot chip-manufacturing plant from Texas Instruments Inc. that will eventually employ up to 1,000 people.

The plant's October launch was announced by officials of Dallas-based TI Tuesday morning.

TI broke ground on the plant in 2004, but the building sat unused for years while TI waited for the right time to open it. That time has come, company officials say.

"We're seeing increased demand for the high-performance analog (chips) that this (facility) will be manufacturing," said Kim Morgan, a TI spokesperson, in an interview with the Dallas Business Journal, a sister publication of The Business Review. "Just like you can't predict downturns, you can't predict upturns ... Opening the facility now will position us for future growth."

The plant is the first chip-manufacturing plant to open in the U.S. since 1996, and is the first globally to use 300-millimeter silicon wafers to manufacture analog chips. Chips are built on, and cut from, silicon wafers, most of which are currently 200 millimeters.

"We can fit more chips onto a wafer. . . The more chips you fit on a wafer, the lower the cost and greater the efficiency in making them."

GlobalFoundry's $4.2 billion computer chip plant under construction in Malta, N.Y., will make chips also on 300mm wafers. That plant, which will eventually employ 1,400 people, is set to opne in 2012.

The Richardson facility plans to ship its first round of chips from the new location by the end of 2010, TI said in a statement.

Once the company’s first phase of equipment is up and running, Texas Instruments expects it will be able to ship more than $1 billion worth of analog chips annually. TI has only 13 percent of the roughly $35 billion to $36 billion market for analog chips, although officials view that as an opportunity for the business to grow.

The need to create more chips at once inspired Texas Instruments to begin pursuing the development of the plant several years ago.

“The time is right for this investment,” said Rich Templeton, the company’s chairman, president and CEO. “Customer demand for analog chips is growing, and there’s tremendous desire to save energy and protect the environment. The chips produced here will help our customers make thousands of electronic products that are more energy-efficient. It is significant that these devices will be made here, in North Texas, in one of the industry’s most environmentally responsible fabs.”

TI’s (NYSE: TXN) chips are used in electronic devices such as smartphones, Netbooks and computer systems. The company said Tuesday it will immediately begin hiring 250 people to fill positions at the plant.

“These are high-quality, well-paying engineering, manufacturing and administrative jobs for our North Texas region," Templeton said in a statement. "The infrastructure that a facility like this requires will create other indirect jobs with suppliers and support services."