IDT to Exit Oregon Chip Plant and Outsource to TSMC

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Integrated Device Technology (IDT) agreed on Thursday to outsource chip manufacturing to Taiwan Semiconductor Manufacturing (TSMC), a move that means its Oregon chip factory will be sold or shut within the next two years.

The move turns IDT into a pure chip designer, since it will cease to own any manufacturing facilities. IDT designs low power mixed signal chips used in computers, communications and consumer electronics.

The chip industry has been transformed over the past 20 years by the opening of contract chip manufacturers, an industry founded by TSMC. Contract manufacturers lets chip design companies focus development efforts and money on new chip products and eliminates spending on new chip factories.

Prior to the advent of contract chip manufacturing, the chip industry was dominated by well-funded companies able to make significant capital investments. Chip factories cost around US$4 billion [B] or more today.

IDT will transfer all product manufacturing technology to TSMC over the next two years, the companies said in a statement.

"The agreement does not include transfer or sale of the process equipment or the IDT facility located in Hillsboro, Oregon," the statement says. "IDT intends to exit the Hillsboro, Oregon wafer fabrication facility at the end of the transfer period and has engaged a third party to market the facility to potential buyers that can continue fabrication operations."

At a recent investors' conference, the chairman of TSMC predicted over 20 chip factories will be shut due to the global recession and as companies outsource production instead of upgrading old factories.

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