Keeping manufacturing competitive to better serve our customers

In what feels like the distant past, Jerry Sanders (former CEO of Advanced Micro Devices, Inc.) made the widely quoted statement "Real men have [wafer] fabs." Although fab ownership has not proven to be a requirement for success in the digital world, in the analog and mixed-signal market, major players like Maxim do need to own fabs.

The very nature of the products that we design demands that we use many customized processes to optimize device performance. Our fabrication facilities, therefore, are valuable resources that provide our designers with an important technological edge, allowing them to create innovative products that deliver performance well beyond what a typical foundry process might allow.

We currently utilize close to 160 proprietary processes, and over 90% of all products are manufactured in our own fabrication facilities. We have no plans to adopt what the industry refers to as a fabless strategy and offload our manufacturing to foundries and other third-party suppliers.

Having said that, we do have two models for using external wafer fabs: 1) when we can use available technology, especially in deep submicron, where capital costs are too high for one company like ours to afford; 2) when we enter into strategic, exclusive agreements with a foundry to install our proprietary technologies for better flexibility and manufacturing redundancy.

Last year we did this by partnering with Seiko Epson to use their advanced, submicron 200mm fabrication plant in Sakata, Japan. This deal combines Maxim's innovative mixed-signal design and process technologies with Seiko Epson's world-class semiconductor manufacturing. As a result, we are able to deliver a new level of quality and service to our customers, with reduced cycle times and a very competitive cost structure.

We continually evaluate facility efficiency and capabilities to determine which fabs to maintain, upgrade, or shut down, and when to add new capacity to handle increased market demand. This year we did just that. We announced our decision to retire our oldest fabrication facility in Dallas, and transferred the products mostly to our larger, much more efficient manufacturing plant in nearby San Antonio, Texas. The San Antonio facility is a much newer plant that has many times the capacity of our twenty-year-old Dallas factory. The newer factory allows us to produce chips much more economically to ensure that we deliver the lowest cost product to our customers.

As production demands dictate, we will increase the capacity of the San Antonio facility and bring on-line other manufacturing facilities that are in the final stages of qualification. This is an on-going process to better serve you.

We are always at your service,