After UMC acquired 30% of SiS, the CEO of the Hsinchu-based contract semiconductor manufacturer became the CEO of the Taiwanese second largest chipset designer as well. This Monday Mr. John Hsuan told at a press conference in Taiwan some aspects of SiS’ future strategy. The key-aspects of the new ideology are joint development of advanced manufacturing processes with UMC and focusing on products for higher-end market in order to improve gross margins and return to profitability.

The new CEO threw away SiS’ own 0.13 micron technology project and now all 0.13 micron chips ever developed by SiS will be made at UMC facilities using jointly developed fabrication process. As far as I remember SiS Xabre600 graphics processors both with and without VIVO capabilities are made using 0.13 micron technology and now it is not so clear for me what is wrong about SiS’ process if it works? Maybe UMC simply wants to manufacture complex devices with higher gross margins at their own fabs in order to utilise them as well as to secure its collaboration with SiS who will continue to use its own 0.15 micron technology to make its core-logic and graphics products?

John Hsuan also criticized SiS last year’s strategy of expanding market share with low prices. According to him, this caused the chipset designer’s gross margins to decrease 5 points from 26% in 2001 to 21% in 2002; for instance SiS’ gross margins fell to 17% in the fourth quarter 2002 what is unacceptably low. In order to return the company to profitability, the new CEO plans to refocus SiS on higher-end market segments what will be pretty hard to do given that Intel and ATI Technologies will offer very powerful solutions this year, while it is not clear whether SiS has legal rights to produce 800MHz Quad Pumped Bus supporting chips.