Bigger and stronger with Intel: Q&A with Bob Krysiak, VP of STMicroelectronics

Bigger and stronger with Intel: Q&A with Bob Krysiak, VP of STMicroelectronics
Hans Wu, Taipei; Esther Lam, DIGITIMES                                                                          [Friday 25 May 2007]

STMicroelectronics and Intel finally answered to market speculations by announcing the establishment of a new flash memory company. Digitimes had an opportunity to talk with STMicroelectronics' vice president Bob Krysiak about details of the consolidation.

Q: Why did STMicroelectroincs end up deciding to establish an individual memory entity with Intel?

A: Our president, who came from STMicroelectronics' memory business group and has a good understanding about the memory business, believed that only by enlarging business scale can you open chances for winning in the fierce memory race, and this explains why our company chose to tie up with Intel in the memory business.

Prior to the official establishment of the new entity, Intel was the second-ranked NOR flash player while we were the third. Under the consolidation, we have now risen as the number one player in the industry.

When memory production technology advances to generations like 45nm, 32nm or even 22nm, the required investment is considerable for any company. This means that no single company can bear the huge cost, not even us nor Intel.

We still see substantial demand for NOR flash in the future, like demand coming from handheld applications and wireless communication devices. We are also anticipating the market take off of NAND flash in the low-density hard-disk-drive (HDD) market.

Q: Will you produce flash memory at STMicroelectronics' or Intel's fabs? Or will the new company adopt a similar outsourcing policy as Spansion?

A: Under this partnership, we will have capacity coming from both of STMicroelectronics' and Intel's fabs. For Intel, production will be made at its Israel fab, Fab 18. Backend production will be done at its Cavita, Philippines fab. Intel's testing facility in the Pudong area of Shanghai may also assist in backend production in the future.

For STMicroelectronics, we will have front-end production commence at Singapore's AMK8 fab and the new M6 fab. Based on the current plan, our Italy fab may also be responsible for front-end production during 2009-2010. Backend production will be done at out Muar, Malaysia fab.

Our jointly-established fab with Hynix Semiconductor at Wuxi, China, may also help contribute some capacity in the future.

Regarding the question about any potential outsourcing plan, I will say no based on my current observations, given that we are already self-sufficient in capacity.

Yet, I have to say our relationship with Taiwan Semiconductor Manufacturing Company (TSMC) is still very good and we will continue having TSMC as our foundry partner in the future.

Q: STMicroelectronics will be introducing NOR and NAND flash technologies into the new company while Intel will be bringing NOR flash technology. But Intel has already partnered with Micron Technology in forming IM Flash Technology, do you see the new entity rising as a competitor to IM Flash?

A: Actually, the proportion of NAND flash production at this new company is still very limited. But as we see substantial demand from NAND flash, we see competition inevitable, especially since the industry by nature has keen competition.

Q: What is the purpose of inviting a private equity firm into the establishment of the new company?

A: The main purpose is to build up a successful new company based on the successful experience of Francisco Partners building new technology companies. This explains why the upcoming chief executive officer (CEO) will come from Intel, chief operation officer (COO) from us and chief financial officer (CFO) from Francisco Partners.

This interview was translated from Chinese.