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To: John Graybill who wrote (50305)	1/12/2000 9:20:00 AM
From: DJBEINO	Respond to of 53903

Taiwan's Vanguard shifting to foundry from DRAM TAIPEI, Jan 12 (Reuters) - Taiwan's Vanguard International said on Wednesday it aimed to become a dedicated microchip foundry by the end of 2000, shifting away from commodity DRAM memory chips. ''Vanguard has decided to gradually phase out DRAM production and become a dedicated foundry by the end of 2000,'' Vanguard spokesman Jesse Chou told Reuters by telephone. Chou said Vanguard chairman Morris Chang, who also heads Taiwan Semiconductor Manufacturing Co , the world's top foundry, made the announcement at an internal meeting on Tuesday. Taiwan Semicon is Vanguard's biggest shareholder with a 25 percent stake. By 0210 GMT, Vanguard shares had soared by the daily seven percent volatility limit to T$43.8. Taiwan Semicon, flush with profits but starved for capacity in the face of intense demand for its made-to-order microchips, has bought out two microchip makers in the past two weeks in share-swap deals worth an estimated US$6 billion. On Friday it said it was buying rival Worldwide Semiconductor Manufacturing Corp and on December 31 it said it would buy out TSMC-Acer Semiconductor, its venture with computer maker Acer Inc . ''Foundry demand is very strong and will likely stays that way for at least two years,'' Chou said. ''We are certain there will be steady orders once we become a dedicated foundry.'' DRAM business, by contrast, is far more volatile, Chou said. ''Prices for DRAM are highly volatile. Once you're in the downcycle, it's very, very difficult to survive. We've been there before.'' Vanguard already has shifted 20 percent of its production capacity to made-to-order foundry chips, Chou said. Chou said possibility of a merger with Taiwan Semicon was open but was not in the cards for now. ''Chairman Chang told us he does not rule out such possibility, but there is no specific timetable,'' Chou said. Vanguard's 1999 sales totalled T$13 billion, compared with T$9.8 billion in 1998. (US$1=T$30.8) biz.yahoo.com