Does the agreement between ST and IBM mean the Crolles 2 Alliance will continue?

The Crolles 2 Alliance (between STMicroelectronics, Freescale and NXP) is due to terminate at the end of 2007. The agreement with IBM opens up broader international perspectives. So there is no sense of a break, but much more than just carrying on something that already exists. The Crolles 2 Alliance was a stage, an excellent learning process that has enabled us to take a step up internationally and to develop further our collaborative strategy. The Crolles 2 Alliance was calibrated, in terms of means and resources, to meet objectives related to the 65 and 45nm nodes set for a five-year period, from 2002 to 2007. But that confi guration was no longer adequate for the following generations, due to their development cost increase.

Does the new agreement provide a scaled response to the needs of the site?

AWith current market trends it is essential to set new goals, to defi ne the requisite conditions for producing next-generation microelectronics technologies, on 32 and 22 nanometre (nm) processes. To bridge this technological gap, R&D investment must be tripled and expenditure on production tools doubled. STMicroelectronics already spends 15% to 20% of its budget on R&D and there is no question of exceeding that threshold. It was consequently essential to fi nd a new confi guration capable of meeting these needs. We had the choice between two possible attitudes: either we could give up, or we could affi rm our determination to carry on. STMicroelectronics adopted the second option. Obviously our desire to remain involved in every stage of the industrial process, from design through to manufacturing, was important but it was not enough in itself. We had to demonstrate our ability to make a change of scale to join one of the world’s main ecosystems. There are three main semiconductor ecosystems worldwide. There is Intel, which does not want to enter into a partnership with its competitors; there are Asian foundries (TSMC in Taiwan and newcomers in China), with which there is a serious risk of social dumping; and lastly there is IBM and its research allies. Very quickly a technological alliance with IBM emerged as the right solution.

Does the change of scale concern research and production?

It’s a change of scale for ST, and for the
Crolles site. Initially the investment effort
will enable us to optimise production
capacity and increase output from 2,800
to 4,500 300mm wafers a week.
With this agreement STMicroelectronics
is joining the IBM CMOS Technology
Alliance, a durable ecosystem consisting
of six industrial partners (1). From a fi nancial
point of view this alliance makes it
possible to raise the budgets required for
the technology generations based on
32nm and 22nm processes. IBM recognizes
our capacity for collaboration and
there is now a European centre and a US
centre, both operating in two fi elds:
upstream research and production.
There is no doubt that the assets of
Grenoble-Isère, around the Minalogic

competitiveness centre, weighed in the
balance. Our potential for upstream
research, along with CEA Leti, was a
decisive factor. Until now the Albany
Nanotech Centre in New York state was
the only reservoir of brainpower serving
the IBM CMOS Technology Alliance. The
agreement between ST and IBM means
that CEA Leti will become the Grenoble-
Isère equivalent of the Albany centre.

What does the agreement involve in practical terms?

The agreement encompassescore complementary metal-oxide-semiconductor (CMOS) technology, for which the focal point is IBM-US, but also enhanced technologies for system-on-chips (SoC), a fi eld in which ST-Crolles is the market leader. Regarding high added value derivative technologies such as embedded memory and analog devices, there are many consumer applications, forming the backbone of our customer portfolio. The fundamental change concerns the nature of our partnership. To use an image, the Crolles 2 Alliance worked in much the same way as a block of fl ats under joint ownership: each partner owned its own machines, came to Crolles to experiment on industrial research and shared the facility’s production. The agreement between ST and IBM opens the way for collaborative exchange. We will be moving up to a global integration model. Thanks to this agreement there will be reciprocal exchanges of teams between IBM and ST.

What impact do you expect this to have on production?

By boosting production capacity to 4,500 silicon wafers a week by 2010 we will be able to cover the full extent of demand from ST’s customers, and more. The resulting margin for manoeuvre will enable us to offer excess output to other fi rms, regardless of whether they are IBM partners or not, as our agreement with IBM is by no means exclusive. ST also has the option of working with foundries all over the world in Singapore, Taiwan, Israel and so on. In this respect IBM’s microelectronics club is very open, with each partner controlling the technology it owns.

What is the outlook for the future?

The Crolles 2 Alliance was a stage, a springboard to reach a truly international ecosystem and the defi nition of a business model for the next fi ve years. The new agreement strengthens the position of Grenoble-Isère as a global world wide reference. As for the market, after years of frantic growth (15% to 20% a year), the semiconductor industry has matured. We are currently registering annual growth of 7% to 8%, which is still twice the rate for global industrial growth. We may look forward to the future with plenty of confidence.

1 IBM (US), Samsung (Corée), Chartered (Singapour), Infineon(Allemagne), Freescale (US), et STMicro electronics (France)

Siemens Transmission & Distribution has chosen Grenoble to boost production of 8DN8 gasisolated switchgear. This type of substation, with its metal enclosure, is used to control electricity distribution on high-voltage networks, commonly located near cities. To manufacture these products, which are an off-shoot of Siemens’s top-of-the-range technology, the know-how of production teams is an essential factor. For Ingo Wassum-Paul, the CEO of the Grenoble facility, the quality of local expertise and skills go a long way towards explaining why Siemens chose to locate here. The Grenoble plant adapted its assembly line to correspond to industrial practice in Berlin, enabling the company to continue an active hiring policy. It now has a workforce of 800 people in Grenoble and 12,000 in France as a whole. The first 8DN8 switchgear produced in Grenoble have already been commissioned. This success is the fruit of close collaboration between French and German teams, which has been extended to include R&D, a field in which Grenoble-Isère skills have plenty to offer.

HP France joins Minalogic

Hewlett-Packard has joined the Grenoble-Isere micro and nanotechnology and software competitiveness cluster Minalogic, originally started in 2005. The computer manufacturer has been operating in Grenoble since 1971. This move consolidates its involvement in the local economy and confi rms its determination to develop here, integrating the growing dynamic on nanotechnology and embedded software. HP will also be represented on the Minalogic board and will thus contribute to defi ning the industrial strategy of this world class competitiveness cluster in a rapidly evolving market. Workwise the arrival of HP mainly concerns collaborative projects focusing on service infrastructures for smart devices, a field in which the growth strategies of HP and Minalogic converge. HP intends to contribute its expertise to increase the reliability and security of embedded software projects. HP Grenoble’s key activities fit perfectly with the current business plan. The company is already playing an active role in Minalogic’s intensive computation working group. It will also be providing the centre’s small and medium-sized companies with an HP super-calculator rated at about 2 Terafl ops (two thousand billion instructions a second).