The Panasonic-TowerJazz jv may not be the last such deal in Japan with other Japanese IDMs possibly looking to unload fabs.
“Where this can be very exciting is because a company with the reputation of Panasonic could attract other IDMs who are interested in consolidations,” TowerJazz CEO Russell Ellwanger told EW.
There are a number of IDMs in Japan who are finding the cost of running and upgrading fabs to be too heavy a burden. One company known to be keen to strip out costs is Renesas which runs several fabs in Japan.
Under the Panasonic-TowerJazz deal, three of Panasonic’s fabs we’re put into a jv which will be managed as a foundry business by TowerJazz.
TowerJazz takes all the revenues, which will increase its annual revenue by $400 million to $900 million.
TowerJazz has 51% of the equity and takes 51% of the profits.
As the Panasonic fabs are running at 50% utilisation, TowerJazz has substantial headroom to increase its foundry business above current levels.
Asked where he saw the increased revenues coming from, Ellwanger replied: “We should be able to grow our sensor business. Panasonic has world-leading processes for sensors which we are able to use for other customers.
One of the three Panasonic fabs is a 300 mm fab running 65nm CMOS image sensors.
Another area where Ellwanger expects to be able to expand his foundry business is “high voltage power products on SOI.”
The company is very into specialty technologies and has done a lot of work on GaN and SiGe processes.
Panasonic is committed to acquire its products from the jv for at least 5 years of volume production.
Asked who had initiated the deal, Ellwanger replied: “The initial contact happened a few months back from Panasonic. We already have a fab in Japan and I have had a long-time relationship with Panasonic from my time at Philips.”
The question now is: Who will be next among the Japanese IDMs who will see the Panasonic-TowerJazz model as a convenient way to shed the heavy overhead of chip manufacturing?
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