ZMD goes fabless as X-FAB acquires ZFOUNDRY

ZMD plans 20% growth in 2007; X-FAB continues its worldwide expansion

X-FAB Semiconductor Foundries AG (Erfurt) and ZMD AG (Dresden) have agreed that X-FAB will take over ZFOUNDRY (ZMD Analog Mixed Signal Services GmbH & Co. KG), the wafer production facilities of ZMD, located in Dresden, effective immediately. ZFOUNDRY will be integrated into the X-FAB Group as a subsidiary of the Erfurt-based X-FAB Semiconductor Foundries AG. In addition, the companies agreed to maintain close collaboration long-term regarding wafer manufacture. A wafer delivery contract ensures that X-FAB will become the principal supplier of foundry services for ZMD which, in turn, becomes one of the Top 10 customers of the X-FAB Group. Financial details of the deal were not disclosed.

Both companies benefit from this step, which mirrors a trend in the semiconductor industry to separate circuit design from circuit manufacture, to gain the cost advantages and other benefits of specialization. ZMD AG now can focus on its core business – developing its innovative analog/mixed-signal circuits – while maintaining access to the premium manufacturing capacity and expertise of the X-FAB Group. By acquiring ZFOUNDRY, X-FAB continues its successful strategic growth plan and expands its total manufacturing capacity by 15%, bringing its 8-inch equivalent wafer starts to approximately 70,000 a month.

ZFOUNDRY is a state-of-the-art wafer fab for 6-inch wafers, with a technology range of 0.8 to 0.35 micrometers, and is certified according to the demanding requirements of the automotive industry. In 2006, the foundry segment of ZFOUNDRY recorded 44.5 million Euro in revenue with approximately 350 employees.

With the sale of ZFOUNDRY, ZMD AG has completed its strategic reorientation of the past five years. Its main focus now is standardized analog/mixed-signal products for demanding signal-processing solutions for sensor systems that are used primarily in the automotive and medical sectors. ZMD AG also plans to expand its product portfolio. The company now has successfully spun off all divisions that are not part of its core business; in some cases, with ZMD AG retaining an interest in the company.

Thilo von Selchow, CEO of ZMD AG, commented on the agreement with X-FAB: "This is the crowning achievement of our strategic reorientation. With X-FAB, we have found the ideal partner for ZFOUNDRY. We now have access to a substantially broader technology portfolio at smaller feature sizes, immediate access to 8-inch technology, and opportunities for second sourcing. At the same time, we maintain the close relationship between process and chip manufacture and, with Erfurt, we have another innovative technology site not far from Dresden. In addition, the arrangement meets a fundamental requirement for ZMD – guaranteed delivery of the respective technologies for at least the next 10 years – with the high quality required by the automotive industry. In this way, we can optimally fulfill the requirements of our demanding customers and achieve our planned 20% growth in 2007."

Hans-Jürgen Straub, CEO of the X-FAB Group: "We are very pleased about this mutually-beneficial cooperation, and will fully support ZMD in its changeover to a fabless company. In fact, this is the third project in which X-FAB has helped one of our customers transition to a fabless organization. We consider ZFOUNDRY with its proximity to Erfurt a very valuable addition for X-FAB, especially because it increases manufacturing capacity for our technologies and services that are constantly in high demand."