Manufacturing matters to Analog Devices in the IoT era
Analog Devices has two manufacturing sites; a 150mm wafer fab in Wilmington, Massachusetts and a 200mm wafer fab in Limerick, Ireland. Across the company the in-house to external manufacturing ratio is roughly 50:50, according to Denis Doyle, vice president responsible for the Irish manufacturing site. Doyle is also an Analog Devices Fellow having spent more than 20 years in R&D with the company.
But many have argued that fab-lite is a misnomer, and just another way of identifying the long and drawn-out exit from manufacturing as old amortised fabs continue to churn out products but companies seek to reduce their R&D budgets and capital expenditure.
On the other hand, analog, MEMS and sensor circuits seem to be enjoying renewed business significance as their ability to create the value within equipment and command margin has been maintained while almost all the digital CMOS markets are crowded with players and margins always seem to be under pressure.
Has that changed the landscape and does it mean Analog Devices will invest in manufacturing?
"Everybody has followed Moore’s Law and it has served everyone well. But there is some uncertainty now. People recognize that miniaturization is becoming much more expensive and that the More-than-Moore axis is important, leading to the creation of the Internet of Things (IoT).
But the roadmap there is not as certain and nor are the business models," said Doyle, in a phone interview with eeNews Europe.
"For example people use the term MEMS foundry but it is not like a CMOS foundry. It is really MEMS outsourcing because MEMS devices are so specific and process-related."
"IoT is very exciting. We feel the market is coming towards us with our skills in wireless transmission, sensors, conversion of data, process control and monitoring. And it is particularly relevant in the business sectors we serve; industrial, automotive, healthcare. IoT is about measuring more, converting more of the real world to a digital version, and it is only just starting. So it is not about Moore’s Law ending – but changing.
Both of ADI’s wafer fabs able to run a wide variety of processes including CMOS, BiCMOS, DMOS and BCD at geometries from 3-micron down to 0.18-micron, as well as MEMS processes. One reason for ADI to maintain manufacturing is that in the sectors it serves it has to be able to supply customers for a long time.
"If we can get a process externally we could probably use it. So something like 90nm CMOS we would use the scale of an external foundry. The runs we do internally are often small runs that are not suitable for foundry or they are highly specialized. High-precision op amps we make in-house but we also make CMOS op amps in foundries. A lot of our high-speed ADCs and DACs can be done externally and anything with a large digital content would tend to be done out of house," said Doyle.
So does that mean the outsourcing is increasing or decreasing as a percentage of ADI’s production?
Doyle explained that manufacturing decisions are made on a case-by-case basis. "It’s not a question of a target. It is what it is. We will continue to develop processes and features that are not available elsewhere. For example in the MEMS space, More-than-Moore, sensors. That’s where we see renewed demand to make use of our fabs." Doyle added: "We would add capacity and we have added manufacturing capacity in the past."
ADI announced a €23 million (about $31 million) manufacturing expansion for Limerick in 2010 and a further €50 million (about $70 million) R&D spending program there in 2011. In both cases it received support from the Irish government’s development agency. But compared with digital investments these are small amounts and are more about adding capability than adding capacity.
"Well MEMS are tiny and you don’t need a lot of wafers to serve this market," said Doyle. For the same reasons ADI is not expecting to change to larger wafers any time soon as 150mm and 200mm are the right wafer diameters for many products.
But if ADI hit the jackpot with a particular circuit would it invest? "Yes, if economics justify it. But it needn’t be all or nothing," Doyle said indicating that if a circuit was needed in sufficiently high volume a way to outsource its manufacturing could also be found.
But it is also the case that Analog Devices sold its MEMS microphone business to InvenSense Inc. for $100 million in 2013. It was a case of the MEMS microphones becoming too consumer-oriented and ADI chose to focus on high-performance inertial sensors to serve automotive, industrial, and healthcare applications (see InvenSense to buy ADI’s MEMS microphone business).
At ADI’s Limerick site about 1,100 people are employed with slightly less than half that number in manufacturing. "We are busy working on new technology and materials such as non-transistor type processes at the wafer level. So that might be adding electroplating of materials, the addition of polyimide and gold to make transformers. We wouldn’t put gold in a regular CMOS line."
Clearly manufacturing still matters to ADI and possibly more than ever as the opportunities to bring wireless, sensing and conversion together increase in the IoT era. But don’t expect a sudden leap to manufacturing on 300mm diameter wafers. ADI’s business model is focused away from consumer electronics on the higher value, relatively lower volume parts of the market but it will continue to invest with discretion in special processes and capabilities while letting foundries take care of its standard process and higher volume requirements.
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Analog Devices Posts Strong Fiscal Q2
InvenSense to buy ADI’s MEMS microphone business
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