Hyundai aims to be $1 billion silicon foundry supplier with converted DRAM fabs
By J. Robert Lineback
Semiconductor Business News
(07/14/00, 09:31:32 AM EDT)
SAN JOSE -- DRAM giant Hyundai Electronics Industries Co. Ltd. plans to turn itself into a $1 billion silicon foundry supplier by 2002 as part of its efforts to diversify its semiconductor business and quickly leverage off huge capital investments required in the competitive memory market, said top company managers during an interview here this week.
Hyundai's aggressive plans aim to increase the company's foundry business by 277% to $400 million in 2000 from just $106 million in 1999. In 2001, the South Korean company intends to increase its silicon foundry revenues by another 88% to $750 million and then reach $1.2 billion in 2002.
The plan hinges on Hyundai's ability to convert 8-inch wafer fabs and advanced DRAM processes over to logic production as memory technology begins to mature. While leading-edge DRAM processes are now losing their competitive edge quickly in memory markets, the chip technology still has a great deal of life and potential in logic production, noted Youm Huh, senior vice president of Hyundai's System IC business unit based in Cheongju-si, Korea. The peak in revenues for a technology node in logic ICs is about two years after DRAMs, he said.
Consequently, Hyundai plans to leverage off this gap between peak revenues in DRAM and logic technologies to build its dedicate foundry business, which will take 60% of the new capacity being converted from memory to logic production. When the time is right, the Korean company aims to convert an entire 8-inch DRAM fab to logic and foundry production in just six months, adding mostly new tools for back-end-of-the-line processes, such as chemical mechanical planarization (CMP) and other systems for more layers of interconnect on ICs.
"This is much less time that building a new foundry fab," noted Huh.
Each converted fab will dedicate 60% of its output to Hyundai's foundry customers, said Channy Lee, executive director and general manager of the company's foundry operation, based in Seoul. Hyundai aims to differentiate itself from the larger pure-play foundries--such as Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC) and United Microelectronics Corp. (UMC)--by offering certain value-added technologies earlier than its competitors. These targeted technologies include a new 0.35-micron high-voltage CMOS process and embedded memories, Lee said. The 0.35-micron high-voltage process will now handle 18 volts and it will be at 20 volts next year.
"TSMC is not yet offering this capability in 0.35-micron technology," Lee added. The embedded DRAM capability will provide foundry customers with up to 64-megabits of memory using Hyundai's 0.25-micron logic processes, he said.
In the first six month of this year, Hyundai has already converted two 8-inch memory fabs in to logic production. Those two facilities were part of LG Semicon Co. Ltd., which merged into Hyundai last year to build a huge DRAM supplier. The two 8-inch logic fabs will now use only 40% of their capacity to produce Hyundai's own product lines, promised Huh, who's System IC business unit includes the foundry operation.
Unlike other integrated device manufacturers (IDMs) which are attempting to serve the growing foundry business segment, Hyundai believes it has an advantage in its relatively narrow focus in non-memory products, according to Huh. Outside of its DRAM sales--which are expected to account for 81% of Hyundai's $6.6 billion chip sales in 2000--the company's logic products are focused on microcontrollers, image sensors, and display drivers, Huh said.
"This will help us maintain our foundry commitments and focus," he said, adding that Korean company has no intention to significantly expand beyond its current non-DRAM product segments.
By the end of 2000, Hyundai expects to the two converted DRAM fabs to play a key role in pushing its foundry revenues to the $400 million mark. In 2001, Hyundai plans to convert another 8-inch wafer fab in Korea to logic chip processing, and again, dedicate 60% of its output to foundry customers. By the end of 2001, Hyundai's 8-inch logic fab capacity will increase to 75,000 wafers per month from 45,000 at the end of 2000, according Huh.
Prior to this year, Hyundai had been serving foundry customers with two 6-inch fabs (one owned by LG Semicon and the other by Hyundai prior to the 1999 merger). All but a small percentage of the capacity was 0.5-micron technology in the two fabs, which fabricated about 60,000 wafer a month.
The two newly converted DRAM fabs are being used to offer 0.25- and 0.35-micron processes to foundry customers. About 40,000 eight-inch wafer a month will be produces with the 0.35-micron technology at the end of this year with 5,000 wafers being fabricated with 0.25-micron design rules. (A total of 60% of the capacity is earmarked for Hyundai's foundry services.)
When the third 8-inch fab is converted from memory production, Hyundai will increase 0.25-micron logic processing to about 15,000 wafers a month and nearly 20,000 wafers a month produced with 0.18-micron and below feature sizes for its own products and foundry services.
Hyundai believes copper interconnects on logic will become a requirement in the 0.15-micron generation, said Lee. That process is now in development with a low-k dielectric insulator for that generation of technology.
By 2003, Hyundai hopes to reduce its dependency on DRAMs, but still increase its volumes in the competitive memory segment. It is targeting 60% of its revenues in DRAM vs. 93% of its $3.3 billion chip sales in 1999. Flash and SRAM products accounted for just 2% of its 1999 chip revenues, and that segment is targeted to become 20% of Hyundai's semiconductor sales in three years.
The "system IC" business (logic and other functions) will grow from 5% of Hyundai's chip sales in 1999 to 11% in 2000, and 20% in 2003--including the company's foundry services which are most likely to exceed $1.5 billion, assuming the chip industry does not hit a major downturn.
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