Cypress launches flexible manufacturing strategy

DECEMBER 13--Cypress Semiconductor Corp. (San Jose, CA) and Grace Semiconductor Manufacturing Corporation (Grace; Shanghai, China) have entered into a strategic foundry partnership. Under terms of the agreement, Cypress will transfer its Programmable System-on-Chip (PSoC) mixed signal array, CMOS image sensor, WirelessUSB, and PC clock process technologies to Grace and in turn will receive preferential volume access to Grace's foundry capacity. The increase in capacity will augment output from Cypress's production facilities in Bloomington, MN, and Round Rock, TX, supporting Cypress's high-volume, high-growth products used in consumer and computation devices.

Qualification of the first product is scheduled for the beginning of the third quarter of 2006 in Grace's 8-in. facility in Shanghai. Grace will start production with the PSoC mixed-signal array on Cypress's proprietary S4 technology. Following the ramp-up at Grace, Cypress expects to increase its overall capacity by an additional 15,000 wafer starts per month by the fourth quarter of 2007.

Cypress will transfer its technology using best-in-class business processes in conjunction with the deployment of manufacturing process control experts to oversee the seamless integration of Cypress's manufacturing technology and advanced process control infrastructure into Grace. This will ensure a timely and efficient transfer of technologies, methodologies and requisite skill sets, enabling Grace to fully integrate Cypress's quality, statistical process control and demand fulfillment attributes.

Revenue from Cypress's Consumer and Computation devices grew by more than 25% in the third quarter of 2005 and is expected to increase again in the fourth quarter. The chips are used in a variety of applications including MP3 players, set-top boxes, gaming systems, and computers.