December 07, 1998, Issue: 1138
Section: News
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IBM and Nanya map out details of DRAM licensing agreement
Jack Robertson and Sandy Chen
As part of a $200 million DRAM licensing deal with IBM Microelectronics, Nanya Technology Corp. initially will build only 64- and 256-Mbit devices for the U.S. chip maker, executives said last week.
When IBM's DRAM supply requirements are met, Nanya will consider selling the memory chips to the merchant market, according to Ken Hurley, vice president and general manager of Nanya's U.S. subsidiary in San Jose.
"It depends on how the global DRAM market shapes up at that time," he said.
Last month, IBM and Nanya signed a licensing agreement that would give Nanya access to IBM's 64- and 256-Mbit DRAM designs, as well as its 0.18-micron process technology.
To manufacture the next-generation DRAMs, Nanya will upgrade its existing fab in Taoyuan, Taiwan. The fab currently makes 16-Mbit DRAMs with technology obtained from Oki Electric Industries Co., as well as logic chips for foundry customers. It has the capacity to produce as many as 30,000 wafer starts a month.
The Taoyuan-based company is building a second fab in Linkao High Tech Industrial Park that will also be capable of building 30,000 wafers per month. Hurley said the new fab will be used solely as a foundry for logic chips, and isn't a part of the DRAM arrangement with IBM.
In response to Micron Technology Inc.'s dumping allegations, in which Micron says Taiwanese companies are adding unwarranted DRAM capacity in the midst of a collapsed global market, Nanya is doing nothing more than upgrading existing facilities to produce advanced memory chips, much as Micron itself is doing, Hurley said.
Yen Shan Chuang, president of Nanya, said the upgraded fab will start producing 64-Mbit chips for IBM in the fourth quarter of 1999. DRAM design and production technologies acquired from IBM cover design rules from 0.25- to 0.175-micron feature sizes, he added.
Neither IBM nor Nanya would disclose financial terms of the deal. Each declined to comment on industry reports that payments would exceed $200 million.
An IBM spokesman said the payment for its intellectual property was the major factor in making the agreement with Nanya. IBM had earlier tried to sell its DRAM technology under a similar arrangement to Dong Bu Group in South Korea, which wanted to enter the memory-chip business. But the deal fell through in the midst of the Korean financial crisis, and Dong Bu dropped plans to form a semiconductor operation.
As part of the licensing deal, Nanya will also produce 128-Mbit DRAMs for IBM, which had originally spurned the interim DRAM generation. The company believed the 128-Mbit generation would have too short a lifetime to justify any major investment. However, the 128-Mbit market has been accelerating rapidly, catching IBM without any such product in its line.
Both IBM and Nanya said the agreement could also be used for Nanya to produce Direct Rambus DRAMs for IBM under the U.S. company's license with Rambus. Nanya, though, would need its own license to make Direct RDRAM to sell on the open market, but no plan currently exists to do this, Hurley said.
IBM had been one of the DRAM producers contacted by Nanya years ago when it was looking to enter the DRAM business, according to sources. At that time, Nanya reportedly balked at the price demanded by IBM and went with Oki. Now, faced with an urgent need to upgrade its fab to next-generation DRAMs, Nanya came back to IBM for its technology.
An IBM spokesman confirmed that outsourcing DRAM production to Nanya is part of its shift from memory production to a greater emphasis on building logic devices. He estimated that captive DRAM sales now account for less than 25% of IBM Microelectronics division revenue, compared with more than 50% in the early 1990s.
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