Japanese companies study chipmaking partnership

Several companies are considering creating a joint chip foundry that each could use for semiconductor manufacturing.

Stephen Shankland principal writer
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Hitachi, Toshiba and Renesas are considering establishment of a communal chip foundry to which each could outsource its semiconductor manufacturing activities, the companies said Wednesday.

In a brief statement, the companies said they "initiated a joint study on the feasibility of an independent semiconductor foundry business offering advanced fabrication processes to which each of the companies could outsource fabrication." The joint study will "consider establishing...a planning company, the outline of which is not yet decided."

The semiconductor business is growing, but the increasing cost to build chip factories, also called fabs, means all but a few chipmakers are relying on partnerships instead of in-house manufacturing.

Consequently, it's common for those with fab expertise to build others' chip designs--for example, Texas Instruments makes Sun Microsystems' UltraSparc processors. Among the chip foundry specialists are Taiwan Semiconductor Manufacturing and United Microelectonics, also in Taiwan, and Chartered Semiconductor, which operates out of Singapore.

Several companies, however, still make their own processors. Most notable is Intel, but its rival Advanced Micro Devices is trying to increase its own manufacturing capacity. IBM builds chips, though its microelectronics division suffered financially and was folded into Big Blue's server group in January of 2004.