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Fujitsu Limited


Fujitsu to Realign and Strengthen LSI Business

- Reorganization into subsidiary to further strengthen LSI business -


Tokyo, January 21, 2008 — Fujitsu Limited announced today its decision to pursue the reorganization of its LSI business divisions into a new subsidiary scheduled to be established within March 2008. The decision was approved at a Board of Directors meeting held today, based on careful consideration that Fujitsu had given this matter over a significant period of time. The new subsidiary will enable Fujitsu to accelerate the growth of and intensify its focus on its ASSP(1) business in addition to its ASIC(2) business, while moving forward with business development offering greater speed and flexibility that are characteristic of the LSI industry.

Fujitsu also announced that development and mass-production prototyping of its advanced process technologies for the 90nm-generation and beyond will be consolidated to its Mie plant located in Mie prefecture of central Japan, a decision that was also approved at the Board of Directors meeting today. Leveraging this consolidation, Fujitsu will strive to accelerate development of process technologies for 45nm-generation and beyond.

1. Background for consideration of reorganization of LSI business

Purpose

At the core of Fujitsu's LSI business is logic LSI, used for operation and control functions. While currently offering a wide range of logic LSI products up to 65nm-generation, Fujitsu implements a business model referred to as a new IDM(3) model, in which Fujitsu collaborates as a strategic business partner with internal (Fujitsu Group) and external partners and offers customers full turnkey services, from design and development to manufacturing and sales. Fujitsu's logic LSI lineup offerings to customers worldwide include custom ASIC and COT(4) products, general-purpose ASSPs and microcontrollers, and analog LSIs for system power management.

Interdepartmental collaborations by Fujitsu's LSI business divisions with other internal divisions include reinforcing competitive edge of servers and mobile phones from Fujitsu by providing high value-added LSIs. By leveraging internal synergies to realize advance development and advance evaluation of intellectual property development, for wireless technologies such as WiMAX and image processing technologies such as H.264, Fujitsu's LSI business divisions also achieved early market entry for LSIs targeting these markets.

Fujitsu believes its core competence is comprised of advanced process technologies, an abundant library of competitive intellectual properties, and design technologies that actualize "first-shot full operation(5)" of system LSIs. By leveraging this core competence and focusing on its ASSP business in addition to its mainstream ASIC business, Fujitsu has established a foundation for business featuring design development and software development as a competitive edge. As part of its initiative to accelerate growth of these businesses, Fujitsu reached a decision to pursue the reorganization of its LSI business divisions.

Schedule

The reorganization is scheduled to be implemented in March 2008. Details regarding the new subsidiary to be established as a result of the reorganization are currently under consideration, and are scheduled to be announced when available.

2. Consolidation of advanced process technology development for 90nm-generation and beyond, to Fujitsu's Mie plant

Overview and Reasons for Decision

Fujitsu's turnkey services for leading-edge LSIs for 90nm-generation and beyond - inclusive of core technology development, product planning, design and manufacturing of prototypes for mass production - are currently conducted at its Akiruno Technology Center (Akiruno TC) in western Tokyo, a development site for advanced LSI technologies at which the LSI development and design divisions of the Fujitsu Group are located.

Standard logic LSIs prior to 0.13micrometer generation are manufactured on 150mm and 200mm wafer lines at fabs located at Fujitsu's Aizu-Wakamatsu plant, Iwate plant, and Mie plant in Japan. Advanced logic LSIs for 90nm-generation and beyond are manufactured on 300mm wafer lines at the Mie plant.

As part of Fujitsu's initiative to structurally reform its LSI business, advanced process technology development for 90nm-generation and beyond, and 90-nm-generation logic LSI mass-production prototyping, functions which have thus far been conducted at the Akiruno TC, will be transferred to the Mie plant.

The Akiruno TC was established in July 2000 as a development site for advanced LSI technologies, centralizing the LSI development and design divisions of the Fujitsu Group. Development and prototyping began on Akiruno TC's 200mm wafer line from December 2001. Ultra-low power and ultra-high end logic LSIs based on 90nm-generation process technology developed at Akiruno TC have achieved market success, and Fujitsu will hereafter continue to build on these advantages. Development of 90nm- and 65nm-generation process technologies has been successfully completed at Akiruno TC and LSIs featuring these technologies are currently being manufactured at the 300mm wafer line at the Mie plant.

Given that manufacturing on 300mm wafer lines is ideal for development of 45nm-generation process technologies, by shifting development that was based on 200mm wafer lines at Akiruno TC - which functions as a device development center - to the Mie plant, Fujitsu will accelerate its development of process technologies for 45nm-generation and beyond and maintain mass production adaptability.

Transfer of manufacturing equipment to the Mie plant is scheduled for March 2008. 45nm-generation process technology development is currently being shifted to the Mie plant, with transfer scheduled to be completed within the first half of fiscal year 2008 (April – September 2008).

Future Plans

Fujitsu plans to continue to utilize Akiruno TC as a facility of the Fujitsu Group. In regard to costs that will be incurred for equipment transfer to the Mie plant and other costs, Fujitsu estimates that incurred costs will be approximately 10 billion yen (JPY), with details currently under examination. Impact on Fujitsu's current term financial results is also currently being examined, with announcement scheduled to be made when Fujitsu reports its fiscal year 2007 third quarter financial results.

Glossary and Notes

ASSP:
Application specific standard product. General-purpose products for specific applications, such as image processing and network-related processing.
ASIC:
Application specific IC. Customized ICs for specific applications (customers).
IDM:
Integrated device manufacturer. Refers to a vertically integrated device manufacturer.
COT:
Customer-owned tooling. Refers to a business model in which LSIs designed and developed by the customer are manufactured by an LSI manufacturer. Unlike foundry manufacturing, the manufacturer co-develops with the customer from initial design stages.
"First-shot full operation":
Refers to first-try successful operation of an LSI from the initial prototype chip.

About Fujitsu

Fujitsu is a leading provider of customer-focused IT and communications solutions for the global marketplace. Pace-setting device technologies, highly reliable computing and communications products, and a worldwide corps of systems and services experts uniquely position Fujitsu to deliver comprehensive solutions that create infinite possibilities for its customers' success. Headquartered in Tokyo, Fujitsu Limited (TSE:6702) reported consolidated revenues of 5.1 trillion yen (US$43.2 billion) for the fiscal year ended March 31, 2007. For more information, please see: www.fujitsu.com


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