Cost reduction using systematic target setting of the reference fab methodology

The semiconductor industry is one of the most challenging and investment intensive high tech industries. To successfully compete in the market, all manufacturers worldwide invest a great deal of effort to reduce production costs and to improve efficiencies to world class levels. The chosen approach at Infineon Technologies to reach and maintain cost leadership and best in class performance was the implementation of a central top-down planning tool for production lines: the reference fab, a comprehensive cost model initially developed at the Memory Products Group and rolled out to all production sites. Covering all segments of the value adding chain of the site, the model applies systematic target setting to a limited set of key performance indicators (KPI). The process of target finding is based on a combination of benchmarking results, target cost models and best practice comparisons of all sites. An efficient reporting and controlling system monitoring the same KPIs as used in the reference fab has been implemented in order to establish continuous improvement and best in class performance on a long term run. By using this approach, the Memory Products Division succeeded in reducing production cost by more than 25% compared to initial plan scenarios.