Semiconductor Business News, CMP Media Inc.
September 1997
Micron to spend $1 billion on expansion in 1998
By Jack Robertson
BOISE, Idaho -- Micron Technology Inc. is moving full-speed ahead, despite the memory glut that still plagues the global DRAM market. The DRAM giant now plans to hike its fiscal 1998 capital investment by a whopping 66% to $1 billion, enough to keep its competitive edge in the global memory market, Steve Appleton, chairman told Semiconductor Business News.
"Micron intends to retain its position as lowest-cost producer in the industry by continuing to use leading edge processes and tools," Appleton said in a wide-ranging interview in his office here. Nearly all of next year's capital spending will go to add the latest state-of-the-art equipment to existing fab lines in Boise. The whole idea, Appleton said, is to keep increasing productivity and cutting costs. That's the strategy, he added, that has propelled Micron into one of the top three DRAM producers in the world -- perhaps even No. 1.
Micron has doubled its DRAM output at Boise this year through die shrinks achieved by converting all production lines to 0.35-micron processing. The firm now expects to move completely to 0.30-micron chip designs by the end of the year, which will generate 50% more dice per wafer.
Running its lines with leading-edge processes and tools has allowed Micron to cut costs and increase profit margins up to 49% of sales -- all at a time when the DRAM industry has been running in a severe downturn, Appleton said. Micron, he added, "is the only manufacturer making a profit in DRAMs at this time."
The 1998 capital spending plan doesn't include equipping Micron's large fab shell at Lehi, Utah, with front-end equipment. As long as Micron can increase output economically through die shrinks at the present Boise fabs, "there's no need to launch a new fab at Lehi at this time," the Micron chieftain asserted. "We will build out Lehi when it becomes cost-effective to expand there - not one moment before," Appleton said.
But next year Micron will open up its first production operation at Lehi, a second IC test facility to supplement the saturated Boise operation.
Next year's big expansion shouldn't be a stretch for Micron. The DRAM supplier is in a far better financial position to fund the big increase in capital investment, Appleton said, than many competitors plagued with low profits. "We try to pay for all equipment purchases out of operations. Our present earnings should allow us to continue this policy," he noted.
But just in case, Micron has $1 billion in cash, a $500 million additional line of credit, and $500 million from a 1997 convertible bond issue. All of it is available.
Micron is now positioned to add quarter-micron, deep-UV lithography systems whenever they can cut the cost per bit below the level achieved by present production equipment, Appleton said. The chip maker has deep-UV steppers from ASM Lithography already running in its development fab, which is also being used for the limited production of critical wafer layers.
"We will be moving to install quarter-micron deep-UV steppers in production fabs in the next two years," he predicted. Almost all of the $150 million order placed this summer with ASML will go for deep-UV systems.
Surprisingly, Appleton said he "is confident that we can extend present I-line steppers to quarter-micron processing." He declined to elaborate. No other DRAM maker is known to be attempting to push I-line to the 0.25-micron level.
Despite its success with current DRAM production, Micron has no intentions of letting up on other DRAM producers that it believes are dumping chips. Selling below cost is clearly dumping, the Micron CEO maintained, an action he refuses to excuse because of the global DRAM market crash. "After all," he said, "Micron is making DRAMs profitably."
Appleton said the U.S. Department of Commerce should continue its present DRAM dumping investigation of the two South Korean suppliers, Hyundai Electronics Co. and LG Semicon. He said all the attention on DRAM dumping cases "brings high visibility to the capacity expansion issue.
Foreign manufacturers," he said, "have a new awareness that they can't launch big expansions without any relation to market conditions." The Micron CEO felt this was a factor when South Korean and Japanese DRAM makers cut back production and decreased capital spending in the current market slowdown. |
