Mitel Semiconducter Case Essay

Mitel Semiconductors is a division of Mitel Corporation. The semiconductors division foc procedures on the tune communications fraction of the overall semiconductor foodstuff. The segment is relatively slight when compared to the semiconductor market as a whole but the segment is experiencing high levels of growth over the contiguous five years. Currently Mitel Semiconductors holds 7% of the business communications segment and attention would like to see market share double in the future(a) five to six years.Mitel Semiconductors is apace approaching full force at its Bromont Foundry that performs the entire mythic portion of the integrated circuit manufacturing process. In order to meet managements goal of doubling market share over the next five to six years, Mitel Semiconductors needs to figure out a behavior to dramatically increase production to keep pace with demand. Since traditionally, Mitel Semiconductors is risk adverse management needs a creative solution that great deal be implemented using only the afoot(predicate) come ins of cash and cash equivalents on hand.Mitel Semiconductors tidy sum increase capacity in three distinct ways. First, it can build or acquire a new foundry that can be brought online to produce more wafers for the integrated circuits. This would obviously constitute the union a lot of money. It provide also take findable amount of time to get a new foundry up and running. in that location are however, a few alternatives that require less capital expenditure and can be implemented in a matter of months. The next way Mitel Semiconductors can increase its capacity is to change their wafer size from 100mm to 150mm, 200mm, or 300mm.The increased size of the wafer can increase capacity from the increase in surface area. Each wafer would still require the same amount of impact time but could now produce more integrated circuits per wafer delinquent to the big size. Another way to increase capacity would be to dam p utilize the same surface area on each wafer. Equipment could be upgraded so that the circuits that were cut into the surface of the wafer were thinner. This would al depressive disorder a more cost-effective use of space and more integrated circuits out of each wafer.The slick presents each of these three options for Mitel Semiconductors to increase its capacity in six iterations. change over Bromont to Larger Wafers Advantages Allows the division to convert to smaller line width for low cost Already making production equipment changes and installing advance swell rooms Increased capacity significantly Larger wafers would extend flavour of the plant 150mm could be accomplished without plant shut down lend was plentiful and cheapDisadvantages $250 one million million million dollar cost Immature engineering science All costs hovering around the $150 million mark Cannot use current equipment Lack of supply because of glut of 200mm FABs foursome year to plan, bui ld, and get foundry operational 150mm wafers would cost $30-$40 Million and would take two years 150mm could run into the same problem as 100mm wafers Given the circumstances, a conversion of the Bromont Foundry over to 150mm wafers is the most earmark alternative for Mitel Semiconductors.The larger sized wafers are too expensive for Mitel to consider given their risk adverse position. The company has available around $30 million in cash and cash equivalents that are net of its current liabilities. The conversion over to 150mm wafers can be accomplished in as little as two years but the most principal(prenominal) thing is that it can be done without a plant stoppage so Mitel can continue to manufacture 100mm wafers until the project is complete.The project was estimated to cost between $35 million and $40 million so it fits in line with what Mitel has available to spend. The conversion to 150mm wafers would increase the Bromont Foundrys capacity from 112,000 100mm wafers to 252 ,000 100mm equivalents because of the greater surface area. This increase in capacity will persist in Mitels projected demand into the foreseeable future.The risk to this alternative is the revere that the industry will continue to move into larger sized wafers and it will become increasingly difficult to find suppliers for the 150mm wafer. If that should happen, Mitel would once again be in the same situation. Given the forecasted demand for Mitels semiconductors, there is not sufficient cause to upgrade the Bromont Foundry to sizes of wafers greater than 150mm. At anything larger than 150mm Mitel will find itself in an excess capacity situation and contrive to find ways to sell more integrated circuits.