In-Depth Look: How Manufacturing Hubs Helped This Business Innovate

When President Obama took office, one of his priorities was to revitalize American manufacturing. That’s why in 2012 he launched the National Network for Manufacturing Innovation, a network of manufacturing hubs to help reinvent and reinvigorate U.S. manufacturing and keep us on the cutting-edge of competitiveness for the next generation of manufacturing jobs and investment. 

Here’s an in-depth look at how one manufacturer, X-FAB, worked with this network to adopt a new technology, retain 400 jobs, and build a foundation for jobs of the future -- all while bringing innovation to an industry that was once on the decline.

Andy Wilson, Director of Strategic Business Development at X-FAB, on the challenges they faced with the production of silicon wafers, which are used in computer chips:

“Producing semiconductor chips such as those used in cell phones, computers and other electronic components requires a process called wafer fabrication. These require cutting-edge facilities (wafer fabs) that, as technology advances, eventually lose their competitive edge. Many times, the cost to upgrade a facility to state of the art is more expensive than building a new facility. In the past 15 years, more than 70 wafer fabs in the U.S. have closed given this harsh reality. Increasingly, the next generation facilities are built overseas and, with this transition, the high-paying technical manufacturing jobs and the know-how associated with this industry have moved overseas as well.

“The wafer fab in Lubbock, Texas has survived longer than most by continually reinventing itself. It transitioned from supporting memory devices in the 1980’s and 1990's to supporting automotive devices in the 2000's. By 2012, we found ourselves nearing the end of our life cycle in this market and needed to reinvent ourselves once again to remain viable. At risk were the 400 plus jobs that make up the X-FAB Texas team.”

To tackle these challenges, X-FAB developed a plan to reinvent itself by upgrading to a new technology:

“In 2013 the X-FAB Texas management team chose a strategic initiative to upgrade our facility, which was built to process Silicon wafers, to also process Silicon Carbide wafers. While Silicon has proven to be the optimal material for processing of information, it is far from optimal when it comes to "processing" or controlling power. Silicon Carbide has the ability to transmit power with much lower losses. This becomes especially significant as the 'smart' control of power is extended to high power applications like industrial motor drives, wind turbines, electric/hybrid vehicles, and rail power. As power has become more expensive, there is a world-wide drive to increase the efficiency of the power converters used in these applications. Silicon Carbide is seen as the key to driving these efficiency improvements. It turns out that what is good business is also good for the environment as well.

“The fact that Silicon Carbide is an emerging technology provides enormous opportunity, but also brings a certain amount of risk. It had yet to be proven whether a high volume Silicon fab could be converted to run Silicon Carbide wafers. It was also uncertain when the market for this new material would materialize. These factors made it difficult for the X-FAB management team to justify the $25 million to $50 million investment that would be required to convert our facility to run Silicon Carbide. Given this risk, X-FAB took a conservative investment approach resulting in steady but somewhat moderated progress."

Facing risks with this approach, X-FAB worked with PowerAmerica to accelerate market adoption of their new technology:

“In January 2015, PowerAmerica, one of the manufacturing hubs in the National Network for Manufacturing Innovation, officially opened its doors and launched with a public-private collaboration to accelerate the market adoption of wide bandgap semiconductor power devices. X-FAB Texas joined PowerAmerica and this partnership with PowerAmerica allowed us to accelerate our investment and establish a Silicon Carbide pilot line to validate the concept of running SiC wafers in a Silicon fab. The industry collaborations provided by PowerAmerica allowed us to expand our SiC customer base. Additionally, PowerAmerica funded projects demonstrating the advantages of this new material and helping assure that the market would be ready for the SiC devices we will be producing.

“PowerAmerica support allowed us to accelerate our investments in equipment and engineering resources such that we were able to realize our SiC foundry offering at least two years earlier than we might have without this support and have helped retain the 400 plus jobs we have in place and provide the foundation to expand employment as business grows.

“PowerAmerica is the first federally funded program in which we have participated. This program has been an outstanding success."