MITEL SEMICONDUCTOR

Submitted by: Group 4

Mukesh Kumar Sahu 27NMP22

Amit Gujjewar 27NMP43

Komal Tagra 27NMP51

CASE FACTS – MITEL SEMICONDUCTOR

Mitel Corp. was co-founded by Michael Cowpland & Terry Matthews in 1971 in Kanata, Ontario, Canada.

Mitel Semiconductor – a division of Mitel Corp. employed 500 people worldwide.

Launched its first product in 1973. Products included touch-tone converters,PBX

system. Manufactured its products in Canada, USA & UK. Worldwide expected sales of semiconductors by

1996 – US$140 billion Expected sales growth in excess of US$300

billion by 2000 and up to US$1 trillion by 2005-07.

CUSTOMERS OF MITEL Customer premises & network communication

equipment manufacturers PBX manufacturers Central office networks & high speed network

providers Wireless & CTI product makers

PRODUCT LINES Analog line cards – essential components of

telecommunication equipments Telecom & Networking components – key to

telecom & PBX solutions

COMPETITORS

Dallas Semiconductor, PMC-Sierra, Brooktree, Motorola, National Semiconductor, California Micro Devices, HP, Siemens, Rockwell & Lucent

I.C. MANUFACTURING – EXPLAINED Step 1: Masking – The circuit design is converted into a

series of thin film ”masks” which allowed the circuit pattern to be etched onto the wafer one layer at a time.

Step 2: Fabrication – The wafers are coated with very thin layers of insulators. A mask is then placed over the wafer and is used to control the exposure of the insulating layers to ultraviolet light, electron beams or X-rays which etch the wafer to form the desired patterns. This process may be repeated 10-15 times until the entire I.C. is etched onto the wafer. The wafers are then doped to induce electronic flow. The wafer now contains several thousand I.Cs or DIE.

Step 3: Test & Probe – The wafers are tested, bad DIE are marked and the wafers are cut into individual unfinished chips & sorted for assembly. Each DIE is then glued or soldered to a lead frame, wires are attached, and the whole unit is sealed to protect the DIE. The packaged I.C. Is then retested.

https://www.youtube.com/watch?v=qlUDfZm-T-Y

MITEL’S PRODUCTION PROCESS

I.C. Production was done in two places, Kanata,

Ontario & Bromont, Quebec.

Chip design & R&D took place at Kanata.

Masking operation was contracted out to local

company.

Completed masks were sent to Bromont Foundry

where entire fabrication of I.C. Manufacturing was

done.

These fabricated chips were then sent back to Kanata

for testing & shipment to distributors or directly to

customers.

EMERGING TECHNOLOGICAL TRENDS

Wafer size – Larger the wafer diameter, the greater

the surface area from which chips could be made.

Line width – It refers to the actual width of the

transistors on the I.C. Moving to lower line width

leads to lower DIE costs. Smaller line widths improves

chip performance by increasing the operating speed

and lowering the voltage.

PROBLEMS FACED BY MITEL

European supplier of wafers indicated that it would soon

start converting to larger wafer size to meet the demand of

other more important customers.

Bromont foundry, which was producing 100mm wafers was

finding it difficult to obtain spare parts and servicing of its

100mm equipments and most manufacturers no longer

produced 100mm wafers.

External suppliers including an East Asian firm, to which

Mitel had outsourced its I.C. Production, announced that it

would no longer be able to provide Mitel Semiconductor

capacity past June1996.

AVAILABLE ALTERNATIVES

1) Status Quo

Keep Bromont Foundry producing 100mm

wafers.

Upgrade its current equipment in 8 months for

US$10 million & license 0.8μ technology from

current supplier.

Other 100mm equipments could be purchased

for low cost from other FABs switching to

larger wafer sizes.

AVAILABLE ALTERNATIVES

2) Convert Bromont to Larger Wafers

Can be converted to 150mm, 200mm or 300mm wafer sizes.

But they would not be able to use their any of the current equipments.

Added advantage to convert to smaller line width for relatively low cost.

300mm wafer technology was not mature & pricey, management was sceptical about its success.

Increased capacity under utilization. High cost of conversion to 300mm wafer technology -

$150mn Longer time required to make the plan operational – 4

years

AVAILABLE ALTERNATIVES

If Bromont Foundry converts to 150mm wafer:

Cost will be only $35 mn to $40 mn

Significant increase in capacity without plant shut

down within 2 years

Fear of 150mm wafer technology getting outdated

just as 100mm.

It could result in another expensive conversion at

a later date.

AVAILABLE ALTERNATIVES

3) Contract out fabrication

An attractive option to increase capacity without investment.

Though a deal with the supplier increased the cost/wafer to

up to $600 but provided welcome relief when it could not

meet demand peaks or customer deadlines for critical

deliveries.

Fixed cost to go up by US$1 million due to hiring of

additional engineers.

Risk of securing supplies from suppliers because they were

already running to their full capacities and search for new

suppliers was not successful.

High cost/wafer might impact the gross margins.

AVAILABLE ALTERNATIVES

4) Secure external capacity through Acquisition

Acquire another chip maker to increase capacities to integrate their products into existing lines.

Kirk visited ABB owned small FAB firm in Jarfalla, Sweden & the plant could be purchased for $45 to $50 million ensuring security of supplies.

Changing the orientation from R&D firm to production firm would be tough.

Will have to deal with completely different culture

DILEMMA FOR MITEL SEMICONDUCTOR

Most appropriate option?

What could it afford?

Which option would meet expected demand?

Best return providing option?

Least risky option?

Can any combination of options be

implemented?

Thank You!!