Analog Devices joins TSMC in joint venture to meet escalating customer demand for System ICs, DSPs and GSM chipsets; New fab marks the next wave of growth and strengthens commitment to customers; $1.2 billion US-based site will output over 30,000 8" wafers per month.

NORWOOD, Mass.--(BUSINESS WIRE)--June 25, 1996--Analog Devices Inc. (NYSE: ADI) announced today that it has entered into a joint venture with TSMC (Taiwan Semiconductor Manufacturing Company) of Hsinchu, Taiwan and other equity partners to build an 8" wafer fabrication facility in Camas, Wash., a suburb of Portland, Ore. Construction of the new venture, to be called WaferTech, will begin this summer.

Output from WaferTech will contribute to ADI's overall systems ICs capacity including its popular fixed-point and SHARC floating-point DSPs. System level ICs -- which comprise highly-integrated digital and/or mixed signal circuits and software -- represent 30 percent of ADI's annual revenues and are currently growing at an annual rate above 100 percent.

Under terms of the agreement, ADI will take an equity position in WaferTech, which will guarantee the company access to the advanced process technology and large production volumes of the new facility at the lowest possible cost.

Production will begin in the second quarter of 1998, with volumes expected to exceed 30,000 8" wafers per month by early 1999. WaferTech will utilize the state-of-the- art process technology of 0.35 micron, shifting to 0.25 micron and eventually 0.18 micron.

The joint venture will extend a long-standing TSMC-ADI relationship, which includes the manufacturing of digital and mixed signal ICs in Taiwan. An Analog Devices' spokesperson cited the company's escalating demand for system level ICs and TSMC's demonstrated capability to bring advanced technology facilities on line on schedule, as key reasons for the agreement.

This venture is the latest in a series of ADI systems IC business infrastructure expansion announcements that include the opening of four new DSP design centers, new customer support centers around the world, and the growth of its submicron manufacturing capacity.

According to Jerry Fishman, president and COO of Analog Devices, "This is great news for our customers around the world. Now we're taking steps to assure our customers' continued success into the next century. They have committed to our leading edge architectures for general purpose DSPs and digital ICs for communications and computer products, such as ADI's GSM cellular chipsets. We have in turn made major investments in our design, support and manufacturing infrastructure that will meet or exceed their needs for the next several years."

Donald Brooks, president of TSMC, stated, "With the signing of this agreement, TSMC has formalized a new strategic relationship with key customers. Our company will continue to pursue innovative means of providing the service and capacity needed to meet future market demand for advanced technologies."

ADI expects the growing popularity of its SHARC DSPs in the telecommunications, imaging and 3-D graphics markets to fuel its continued growth in systems ICs. SHARC, the world's highest performance floating point DSP, is also manufactured at TSMC Taiwan.

Another example of the company's systems IC success is the burgeoning wireless communications market. Analog Devices has supplied fixed point DSPs or codec solutions to virtually every handset and basestation manufacturer in the world, with one in three of such systems sold last year containing the company's ICs.

Yesterday the company announced that one of its silicon-and-software solutions is the first ever to be awarded regulatory type approval, a necessity before a GSM handset can be offered for sale to a market expected to reach 100 million subscribers by the year 2000.

TSMC is the world's largest and fastest growing dedicated semiconductor foundry, with three six inch and one eight inch fab in full production in Taiwan. Two additional 8" fabs are under construction in Taiwan.

Analog Devices, with sales of $942 million for fiscal year 1995 and first half 1996 sales of $584 million, is a leading manufacturer of precision high-performance integrated circuits used in analog and digital signal processing applications. Headquartered in Norwood, Mass., the company employs approximately 6,600 people worldwide and has manufacturing facilities in Massachusetts, California, North Carolina, Ireland, the Philippines and Taiwan.

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