Motorola may have shredded 120 staff from its software group last month but spin-off company Freescale Semiconductor has modest expansion plans for its local operations based in Adelaide, according to Australia and New Zealand manager Jay Yantchev.

Freescale, which has its head office in Texas, was originally launched in April this year and 20 percent of the business went public in July. The remainder of Motorola's ownership is being divested in December this year.

Yantchev said Freescale has 23,000 staff worldwide. Locally, 23 will move from Motorola to Freescale and its total head count will rise to 155. The Adelaide office will focus on R&D and is one of only four such centres globally.

"Freescale designs semiconductors mostly for the embedded, networking, and industrial automation markets," Yantchev said.

"The creation of Freescale and the offers of employment are entirely unrelated to [layoffs at] Motorola's software business. This has been planned for months."

Yantchev believes the global semiconductor industry will be soft in 2005, experience modest growth in 2006, and high growth in 2007 on the back of a trend to push more electronic content in the chips themselves. And as more intelligence goes into the semiconductor design software, Freescale will be developing the required tools and protocol stacks.

"We are looking at expanding Freescale if local costs and global market conditions allow us to," he said. "Between 300 and 350 employees will be a critical mass. It won't be gung-ho aggressive growth, but it could be as much as 15 percent per year."

When asked about the state of local semiconductor R&D, Yantchev said Freescale is not building on any existing strength of a semiconductor design industry in Australia because it is a small sector here.

"There is a good supply of good engineers and we attract international talent. There is a high retention rate and the general innovation and dedication of the Australian engineering workforce is good," he said. "All of Freescale's operating and working capital budget represents investment in the local economy and an inflow of revenue to the state.

"Also, there is integration of local industry from a market point of view, for example, with the automotive industry."

Yantchev said Australia is competitive in highly specialized technology areas but for broad R&D, China and India are ahead.

To counter this, he recommends the Australian government find a unique way of giving local R&D its own unfair advantage.

"Any R&D in Australia represents a good investment," he said. "We're very focused on making Australia the centre and recruiting from Australia is a first priority. The nation has a stable infrastructure and low communications cost. Our investment here is tens of millions per year. We invite government and industry to support attracting investment."

Motorola now represents 25 percent of Freescale's business but that should reduce as it goes after new markets and attracts new clients.