Rennes has a promising future. Thanks to its innovations, the site hopes to double its current business volume in five years. STMicroelectronics plans to integrate its technologies for reducing power consumption and increasing chip performance into its high-reliability circuits. The other major future trend is MEMS. The company made a name for itself by building its systems into numerous consumer products, and development is underway to convert the chips for aerospace use. That will take a few more years.
The company’s growth will also require extending its geographic presence and its marketing activities. Rennes is driven largely by the aerospace market, but the chips used in satellites are also popular in the health and petroleum industries. Labs-on-a-Chip (LOCs) for implantation in the human body require reliable components, and drill heads working 20 km underground cost a fortune if they break down. The submarine-cable telecommunications market, which uses repeaters to transmit signals, also requires high-reliability chips in order to limit repairs on difficult-to-access cables.
STMicroelectronics has some presence on these markets, but the challenge in the coming years will be promoting its chips and its expertise to growth industries. The company is also struggling to improve its geographical penetration. The certifications it has are a major advantage, but they’re not always enough to convince certain companies who are wary of “foreigners.” So it needs to work on brand image and international relations.
Finally, the future of the Rennes site might also be tied to diversification of its business activities. STMicroelectronics is looking into the possibility of becoming a service provider, making its expertise and its certifications available to customers that will send their dies to be assembled at the French site. The advantage for the customer is not having to spend five years getting the necessary licenses. We know negotiations with certain partners are in progress, but the names of the players are still unknown.
Rennes Is Immune To Offshoring
We’ll end with an answer to the first question that came to mind as we prepared to write this piece: if the fab’s front end was sent offshore, isn’t there a risk that the back end will be too? The answer is no, and here’s why:
The Rennes site can’t be moved because of the knowledge and skills of its people, who are able to meet the requirements of three rigorous international certifications. Moving the plant without moving its teams couldn’t be done without major investments and without generating delays that remain incompatible with the customers’ needs, Vadrot and Galloy told us. Rennes is special enough that it’s hard to imagine relocating it.
Also, the cost imperatives that lead to offshoring are less pressing, since the Rennes plant’s products have high added value and so are less subject to the pressures of productivity and yield that affect fabs that make consumer-oriented chips. The customers pay for the expertise, the international qualifications, and the assurance that a chip will operate for two decades without the slightest problem. As a further added value, customers also get the data collected during the tests that make each chip fully traceable.