Hi all; Powrchip starts up 12 inch fab early:
Taiwan chipmaker bumps up DRAM schedule
The increase in spot prices for DRAM has encouraged Powerchip to start production at a new factory
ZDNet UK, January 8, 2002
Taiwan memory-chip maker Powerchip Semiconductor will bring forward production at a new factory, just months after deciding to hold off as the market stalled.
The company said on Monday that its about-face was the result of a sudden jump in spot prices of dynamic random access memory (DRAM), Powerchip's main product, which pulled the company's share price higher and made fund-raising a much simpler task.
"This is a very effective environment for investment, and that's part of the reason for accelerating our equipment move-in," Powerchip chairman Frank Huang told reporters at an informal briefing.
Powerchip said it would start installing equipment in March instead of May, and aimed to start delivering chips from the new plant to customers by the end of 2002, instead of starting production in 2003 as previously scheduled.
The new plant will be among the first handful in the world using large 12-inch diameter silicon wafers, which help manufacturers cut costs, as they yield more chips per wafer.
Its initial output would be 15,000 wafers per month -- instead of the previously planned 10,000 -- and eventually rise to 38,000, Powerchip said.
ING Barings analyst Chris Hsieh said the acceleration made sense, considering rapid gains in DRAM prices.
"Everybody, including us, had thought demand and supply would reach equilibrium in the fourth quarter, and the recent DRAM spot-price rally confirms that equilibrium will come sooner than expected," he said.
Taiwan DRAM makers have stuck to their ambitious expansion plans throughout the 2001 downturn, and Hsieh said the current upturn proved them right, though further accelerations of production schedules were unlikely.
Powerchip first delayed the equipment schedule for its second semiconductor fabrication facility, or "fab", by six months in September, when benchmark 128-megabit DRAM was languishing at less than $1, well below the cost of production.
Spot prices are now at about $3.15, according to online microchip broker Dramexchange.com, and Huang said he expected prices to range from $2.80 to $3.80 in the first half, and improve to more than $4 in the second half, owing to shutdowns in outdated plants and a new source of demand: game consoles.
Current spot prices put Powerchip firmly into money-making territory, and the company's share price is up 180 percent from an 8 October low and closed unchanged at 73 cents on Monday.
Huang said the accelerated production schedule would put 2002 capital expenditure at $74.3m, up $114.8m to $143.4m from the original budget.
He said the company hoped to complete an issue of global depository receipts, which is currently being reviewed by Taiwan's market regulators, by the third quarter to pay for the equipment.
Powerchip's decision stands in contrast to contract chipmaker United Microelectronics (UMC), which said last week it could delay moving equipment into a plant under construction in Singapore.
But Powerchip is in a much more volatile business than UMC, and volatility can send a company unexpected profits, as well as unanticipated losses.
ING's Hsieh pointed out that UMC's Singapore plant would be its third 12-inch semiconductor fab, along with a joint venture with Hitachi in Japan and another plant in south Taiwan. "Based on the current outlook for that industry, it's difficult to justify three 12-inch fabs running concurrently."
DRAM is a "commodity" microchip where one company's product is little different from another's, and during times of weak demand for personal computers, the main source of DRAM consumption, bitter price battles are inevitable.
DRAM heavyweight Micron Technologies has taken advantage of the semiconductor downturn to buy a plant from Toshiba, and is in talks with Hynix Semiconductor to purchase more.
Consolidation among the sector's biggest players has left analysts wondering if Taiwan's small DRAM companies can survive, as they each claim only 2 percent to 4 percent of the world market and license technology from foreign partners.
Huang said analysts had the wrong end of the stick, however.
"In the DRAM business, it isn't market share, and it isn't technology, it's cost," he said. The company has set a target of compressing cost to $1.50 per 128 megabit chip, below the $2 to $3 for most competitors.
Cost-conscious Powerchip was Taiwan's only DRAM company to make a profit in the first quarter of 2001, though it has cut last year's financial forecast to a 215.2 million net loss from the previous estimate of $83.3m in the red.
On Monday, Powerchip posted December sales revenue of $21.3m, which brought 2001 sales to $320.3m, down 41.4 percent from a year ago.
news.zdnet.co.uk
-- Carl
P.S. Thanks to TICE for the link:
tice.com.tw |
