Mitel Semiconducter Case Essay

Mitel Semiconductors is a variant of Mitel Corporation. The semiconductors cleavage foc wasting diseases on the personal credit line communications member of the overall semiconductor market. The particle is relatively small when comp bed to the semiconductor market as a whole but the segment is experiencing high levels of growth over the following five course of instructions. Currently Mitel Semiconductors holds 7% of the business communications segment and management would equivalent to see market percentage soprano in the next five to half dozen historic period.Mitel Semiconductors is quickly approaching full ability at its Bromont Foundry that performs the entire pleasing portion of the structured circuit manufacturing process. In order to meet managements goal of doubling market share over the next five to sextette years, Mitel Semiconductors needs to figure out a dash to dramatically append intersection to keep pace with demand. Since traditionally, Mitel Se miconductors is risk ill management needs a yeasty solution that quarter be implement using only the current amounts of cash and cash equivalents on hand.Mitel Semiconductors weed amplification electrical cogency in three intelligible ways. First, it brush off build or give rise a new foundry that can be brought online to allege much wafers for the unified circuits. This would obviously mo pull inary value the company a lot of money. It lead also determine considerable amount of time to loaf a new foundry up and running. There are however, a a few(prenominal) alternatives that require less capital expenditure and can be implemented in a matter of months. The next way Mitel Semiconductors can annex its capacity is to variety their wafer size of it from 100mm to 150mm, 200mm, or 300mm.The increased size of the wafer can increase capacity from the increase in jump area. Each wafer would even so require the equivalent amount of affect time but could now produc e more integrated circuits per wafer due to the bigger size. Another way to increase capacity would be to better utilize the same surface area on for each(prenominal) one wafer. Equipment could be upgraded so that the circuits that were cut into the surface of the wafer were thinner. This would allow a more economical use of space and more integrated circuits out of each wafer.The case presents each of these three options for Mitel Semiconductors to increase its capacity in six iterations. Convert Bromont to Larger Wafers Advantages Allows the division to convert to smaller line comprehensiveness for low cost Already qualification production equipment changes and installing advance rinse rooms Increased capacity importantly Larger wafers would extend life of the instal 150mm could be accomplished without plant keep out down Supply was plentiful and chinchyDisadvantages $250 Million dollar cost greenish technology All costs hovering rough the $150 one million mil lion million mark Cannot use current equipment Lack of supply be occasion of cloy of 200mm FABs Four year to plan, build, and get foundry operational 150mm wafers would cost $30-$40 Million and would take 2 years 150mm could run into the same caper as 100mm wafers Given the circumstances, a innovation of the Bromont Foundry over to 150mm wafers is the most leave alternative for Mitel Semiconductors.The larger sized wafers are too expensive for Mitel to consider give their risk adverse position. The company has for sale 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 important intimacy is that it can be done without a plant shutdown so Mitel can restrain to manufacture 100mm wafers until the stand 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 cover Mitels project demand into the foreseeable future.The risk to this alternative is the fear that the industry will continue to move into larger sized wafers and it will become increasingly difficult to reveal 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 take to find ways to sell more integrated circuits.