X-FAB Takes Over ZMD’s Foundry Operations

April 01, 2007 by Jeff Shepard

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 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 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 0.35µm, and is certified according to the demanding requirements of the automotive industry. In 2006, the foundry segment of ZFOUNDRY recorded €44.5 million 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.