It buys a substantial part of the output of the Lincoln fab and so as well as the owner is the major customer. If CRRC isn’t able to take more product, which is a surprise given the boom in infrastructure modernisation across its home market, then the deal seems to be to offerup the extra capacity to foundry customers. Then the foundry parts will have a different design to the mainstream Dynex parts that CRRC uses, so they are not actually competing.
This leaves Dynex stuck in the middle. It can try to expand sales of its standard products, thereby selling to competitors of CRRC, or offer up its own process technology to its own competitors via the foundry. That’s a tough line to walk. If prospects improve and CRRC takes more product there’s less capacity for foundry customers. When the downturn comes (and Dynex management say that's the case now, in contrast to the rest of the industry) there’s less product business and less foundry business, a double hit. This approach has been tried many times before with limited success.
So the new boss at the foundry division, Mark Kempton, Business Unit Director for Semiconductor Devices, has his work cut out walking that line, but is upbeat of course.
“The formation of the Dynex Foundry Services business is a logical expansion of the company’s commercial product and service offerings,” he said “The receipt of this first external order for high voltage IGBT die builds on decades of high-quality semiconductor fabrication experience at Dynex. The excellent chip performance, confirmed by the customer’s own testing, serves to highlight the quality of our design and manufacturing. We expect this business to grow into a substantial part of our operations over the coming years as we expand our customer base.”
There’s no doubt about the quality and design expertise, but the history of the hybrid product/foundry business model does not bode well.