Samsung to Supply Xilinx With Chips
By Kim Yoo-chul
Staff Reporter
Samsung Electronics will produce chips for Xilinx, a U.S.-based programmable chip company.
Under the partnership, Samsung will supply filed-programmable gate array (FPGA) products ― a type of advanced logic chip that can be reconfigured by customers or designers.
"Production would start at our 12-inch or 300 millimeters wafer fabrication facility called 'S-Line' at our plant, Giheung, Gyeonggi Province," a Samsung spokesman said, Tuesday.
"We will apply highly-advanced 45-nanometer level chip processing technology."
Samsung officials said the deal is the second-largest after the memory chip giant succeeded in developing a 90-nanometer mobile chip for U.S. wireless chipmaker Qualcomm in 2006.
Since 2004, Samsung has been making a strong push into the market for contract-specified chip or "foundry" making. As of the end of 2007, this generated some $400 million in sales.
Analysts were generally positive over Samsung's latest deal, citing an urgent need for the company to find a "significant breakthrough" in its chip business amid the deteriorating global market.
During the fourth quarter of last year, Samsung posted an operating loss of 560 billion won in its semiconductor division.
"Samsung wants to transform its outdated and money losing 8-inch or 200 millimeter wafer fabrication lines into advanced ones for non-volatile and pricey chips on a foundry basis," said an analyst at Goodmorning Shinhan Securities.
"Samsung aims to compete with Intel by strengthening system memory business. The business is just a starting point to go one step further," according to the analyst.
The foundry business sector is expected to experience consolidation to maintain price stability.
Goldman Sachs said in a note to clients that foundries also need consolidation. Similar to the NAND flash chip industry, foundries require high capacity expenditures and R&D costs.
It added that all top foundries have publicly indicated their willingness to consolidate, but no action has resulted.