Mosel Sees $2.5 Bln Plant Aiding Move to Custom
Chips (Update2)
By Alan Patterson
Hsinchu, Taiwan, Dec. 14 (Bloomberg) -- Mosel Vitelic Inc., Taiwan's third-largest memory chipmaker by market value, said it expects to start building a $2.5 billion semiconductor plant in Canada next year to help diversify production.
The project should help Mosel move away from commodity memory chips used mostly in PCs to more profitable custom-designed semiconductors used in phone equipment and other products, according to analysts.
``Mosel already has a lot of chip design houses in the U.S.,'' said Connor Liu, an analyst with SG Securities in Taipei, who has a ``buy'' recommendation on the company. ``I think there's an opportunity.''
The company hopes to supply the so-called system chips, which include memory and processing functions, to potential customers including Nortel Networks Corp. of Canada from the new plant, which will be in close proximity to most buyers.
``For custom-made design of chips, communication with the customer is vital,'' Thomas Chang, a Mosel vice president, who sees a need to move production out of Taiwan, said in an interview. ``Companies will dictate the specifications,
and we will do the implementation.''
While Liu had some reservations on Mosel's lack of experience in making non-memory chips, he said the company is already making a few products of this kind.
Mosel clearly wants less exposure to the computer memory chip business as it is subject to market price changes that can leave manufacturers unprofitable for years. The spot market price for one 64-megabit dynamic random access
memory chip that Mosel makes fell to $3.18 from $8.96 on July 13, which Chang calls a ``disaster.''
Mosel shares fell to NT$22.3 at the close of trading today, down 3 percent. The shares have plunged 73 percent from their annual peak of NT$83.5 on
June 4.
Negotiations
The plan to build the factory in Canada was delayed by the recent federal elections that led to the appointments of new ministers, Mosel said. The company expects to hold final talks on approval of the project with the federal
government in Ottawa after the Christmas and New Year holidays, said Chang.
`The original schedule for the groundbreaking was in April or May,'' said Chang. ``That's getting pretty tight.''
Still, most of the obstacles, such as environmental assessment and importation of labor, have been solved, he said.
Mosel is ``within days'' of a decision by the Canadian government to provide as much as C$500 million ($329 million) in subsidies to build a factory outside
Montreal, Industry Minister Brian Tobin said yesterday.
Quebec's provincial government pledged as much as C$400 million in tax breaks for the proposed project. Attracting technology-related businesses was a key part of the Liberal government's recent election campaign.
``We think attracting this kind of technology to Canada is important,'' Tobin said. |
