CUBE may be in a position to negotiate more favorable deals with its foundry partners...........
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Story posted at 11:45 a.m. EST/8:45 a.m. PST, 12/17/97
Another Taiwan DRAM maker
enters merchant foundry business
By Mark LaPedus
TAIPEI, Taiwan -- A growing list of Taiwan DRAM makers are rushing into
the IC-wafer foundry business due to what seems like an endless downturn
in the memory market.
The latest company is Hsinchu-based DRAM start-up Powerchip
Semiconductor Corp., which today announced major plans to enter the
highly-profitable, merchant foundry business.
Other Taiwan DRAM makers, including Acer Inc., Nan Ya Technology
Corp., and Vanguard International Semiconductor Corp., have recently
announced similar plans.
Taiwan's DRAM makers are scrambling into the foundry business, because
"you can make more money selling wafers than the chip itself these days,''
lamented Frank Huang, chairman of Powerchip, during a press conference in
Taipei today.
For the last year, Powerchip--a joint DRAM manufacturing venture between
Taiwan's Umax Group and Japan's Kanematsu Corp. and Mitsubishi
Electric Corp.--has been exclusively making 16-Mbit extended data out
(EDO) parts on a foundry basis for its key technology partner, Tokyo-based
Mitsubishi.
Powerchip will continue to make DRAMs for Mitsubishi, but the Taiwan
company plans to alter its charter by offering wafer foundry services to chip
makers outside of its Japanese partner, according to Koichi Kijima, vice
chairman and senior vice president for Powerchip.
"We have started offering foundry services for Taiwan's IC design houses in
the initial stages,'' Kijima said in an interview after the event. Powerchip has
also begun making chips on a foundry basis for Santa Clara, Calif.-based
NeoMagic Corp., which is selling an product that combines its 64-Mbit,
VGA controller lines with embedded DRAM technology from Mitsubishi.
Still, Powerchip--and other Taiwan DRAM makers--face an uphill battle in
this non-memory business: they will compete against the well-entrenched,
pure-play foundry companies, such as Singapore's Chartered
Semiconductor Manufacturing Pte. Ltd, Taiwan Semiconductor
Manufacturing Co. Ltd., and Taiwan's United Microelectronics Corp.
Kijima said, however, that Powerchip can also offer competitive foundry
services. In fact, Powerchip's own 16-Mbit DRAM yields even surpass
those from its technology partner, Mitsubishi, he admitted.
Powerchip currently has an 8-inch wafer fab processing ICs with 0.4-micron
technology. The plant is capable of processing 25,000 wafers a month. The
company is currently driving its fab down to linewidth geometries of 0.30- to
0.25-micron--and below, he added
At present, Powerchip is running about 15,000 wafers a month in its fab. In
total, the company is making 5 million 16-Mbit EDO DRAMs per month.
This represents over 50% of Mitsubishi's total 16-Mbit DRAM output.
Powerchip has also begun making 64-Mbit EDO DRAMs for Mitsubishi, as
well as the Japanese company's new line of embedded memories, dubbed
eDRAMs.
Analyst Donald Floyd at Taipei-based ING Barings Taiwan Ltd. said it's no
surprise that Powerchip and other local DRAM makers are entering the
foundry business. The pure-play foundry concerns are reaping huge profits,
but local DRAM makers are losing money, due to a slump in product prices,
Floyd said (see See today's story on mounting DRAM losses).
This year, Powerchip projects a pre-tax loss of $31.2 million. However, it
projects an after-tax profit between $14 million to $15 million, due in part to
a recent devaluation in Taiwan's currency, other analysts said.
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