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 1015 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

MITELS 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

operating speed and lowering the voltage.

the

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 0.8 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!!