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Motorola insures against lead time blowout

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Motorola has moved to ensure it remains largely unaffected by lengthening lead times by expanding its semiconductor outsourcing agreement with Taiwan Semiconductor Manufacturing Corporation (TSMC).

The expanded agreement will see TSMC take up a significant portion of Motorola’s outsourced semiconductor manufacturing, with Motorola benefiting largely from an assured supply of external capacity.

This capacity will go some way to ensuring Motorola is not hit as hard as other vendors by lead time extensions and possible supply shortages as the upswing kicks in.

Expectations that lead times could lengthen come from fears that many semiconductor manufacturers have spread themselves too thinly to quickly scale to meet capacity demands as the upswing progresses.

Motorola semiconductor products VP Bill Walker said the expanded agreement also supports the company’s ‘asset-light strategy’.

“While our recently announced partnership with STMicroelectronics, Philips and TSMC is dedicated to breakthrough technology development, this relationship guarantees us additional access to world-class external manufacturing capacity aligned with the jointly developed process technology,” Walker said.

TSMC said it expects to have a total manufacturing capacity exceeding 8 million wafers by 2006 – almost double its current capacity.

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