Taiwan's Nanya still bullish DRAM demand, plans 300-mm fab
DRAM maker aims at $1.1 billion in sales next year, ramps new 200-mm plant
By J. Robert Lineback
Semiconductor Business News
(12/01/00 13:25 p.m. PST)
SAN JOSE -- Taiwan DRAM maker Nanya Technology Corp. plans to begin construction of its 300-mm wafer fab building in April, around the same time its second 200-mm plant has ramped volume production to 25,000 wafers per month, said Ken Hurley, president of the company's North American operations.
These aggressive plans by five-year-old Nanya come at a tricky time, when DRAM pricing and the marketplace are getting clobbered by inventory dumping and slower-than-expected memory growth, but Hurley believes conditions will stabilize early next year, followed by long-awaited shortages in the summer of 2001.
"We actually think that next year will be pretty good," Hurley said in an interview with SBN. "It will start off slow, but our projections have us at $1.1 billion [in sales], and we have not revised our targets."
Nanya--the world's eighth largest DRAM supplier--still has its sights set on growing revenues 88% in 2001 from a projected $585 million in sales this year, primarily because of increased capacity from the company's 200-mm Fab 2 facility in Linkao, Taiwan. Fab 2 is expected to be processing 15,000 wafer a month by the end of 2000. The 200-mm fab is cranking out 128- and 256-megabit DRAMs--most of which are synchronous DRAMs but also double data rate (DDR) chips--using 0.2- to 0.175-micron technology licensed from IBM Corp.
And Nanya is now planning to move forward with its 300-mm fab. After construction starts on the building shell in April, the company expects to begin ordering 12-inch wafer-processing tools in the middle of 2001, Hurley said.
"We are projecting that we will be in mass production out of that 300-mm fab by Q1 of 2003," he added.
Nanya and the rest of the world's major DRAM suppliers have been waiting for the memory markets to fully recover from the long downturn of the late 1990s, but the need to upgrade manufacturing capacity to larger 300-mm substrates is now putting pressure on memory makers. Earlier this week, Elpida Memory Inc. -- the DRAM joint venture between NEC Corp. and Hitachi Ltd. -- announced it would begin construction on a new $1.4 billion 300-mm fab in January. The facility, located in Hiroshima, Japan, will be capable of fabricating 256-megabit chips with 0.13-micron technology (see Nov. 28 story).
In Lehi, Utah, Micron Technology Inc. has begun equipping its 300-mm pilot line for test runs, but the Boise, Idaho-based company will wait a little longer for stronger market conditions before deciding to turn that facility into a volume production fab, said Steve Appleton, chairman of Micron (see Nov. 15 story). Infineon Technologies AG in Germany has begun investing $1 billion to turn its 300-mm pilot line in Dresden into a volume facility during the next three years (see March 31 story). Samsung Electronics Co. Ltd. is also pushing ahead with its 300-mm production facility in South Korea, and Taiwan's Mosel Vitelic Inc. continues to consider a 300-mm fab site in Canada while it maps out its next move.
But DRAM makers are still facing uncertain times, and it's not clear that 2001 will be the banner year that many need for major new investments programs, cautioned analyst Bill McClean, president of IC Insights Inc. Currently, McClean is forecasting a slowdown in DRAM revenue growth to about 29% in 2001 to $40 billion from this year's 50% increase in sales to $31 billion. If that project holds, DRAM sales will finally approach the peak sales of 1995, which was followed by more than three years of falling memory prices due to overspending on capacity.
While growth might be slower than some DRAM maker expect in 2001, the memory market will most likely not repeat a sharp nose dive in the next several years, said McClean. "The DRAM companies increased investments [on fabs] but they did not get caught up in spending like the last upturn," said the Scottsdale, Ariz.-based analyst.
McClean and other industry observers believe the DRAM segment is beginning to mellow out because of consolidation in the market. "We are looking at the DRAM market growing 50% this year and that's in a booming semiconductor market [overall], but back in 1995, the DRAM market was up 75%," he noted. "While we are still going to have boom-bust cycles in this segment, I think it has dampened a little because of fewer suppliers."
But Nanya in Taiwan is hoping to make dramatic moves up in the DRAM rankings during the current business cycle. By the end of this year, company officials believe Nanya will hit its goal of breaking into the Top 10 and will be positioned at No. 8. Next year, the company aims to move up a notch or two and pass local rival Mosel Vitelic as the largest memory supplier based in Taiwan.
"We think we will have some significant growth in market share next year," said Hurley, who added that the company has not set specific goals for rankings in the Top 10 next year. "No one believes we will be challenging the top three [Samsung, Micron and Hyundai] because of their installed base of capacity and the fact they have 70-75% of the market. But, we want to be a high-quality, low-cost supplier...and we think we can nose up into the next group," added Hurley, suggesting Nanya could make it into the Top 5.
In 2001, the ramp of Fab 2 will play a key role in Nanya's market positioning. The company intends to offer four DRAM generations concurrently next year--16-, 64-, 128- and 256-Mbit memories. Nanya has just started shipping its initial DDR memories as well from Fab 2, said Hurley, and it plans to upgrade the company's Fab 1, which is located Taoyuan, near International Chiang Kai-shek Airport.
The company's original Fab 1 plant is now processing 30,000 wafers a month. About 10,000 of those wafers are for legacy 0.28-micron processes, which were developed by Nanya and licensed for 16-Mbit DRAMs from Oki Electric Industry Co. Ltd. of Japan. Also in Fab 1, an additional 20,000 eight-inch wafers are being processed with the 0.2-micron technology licensed from IBM.
Fab 1 is processing 64-Mbit SDRAMs with the 0.2-micron technology, but plans are underway to migrate it to a 0.175-micron design rule for a shrunk 64-Mbit chip, said Hurley.
In Linkao, located between Taipei and Taiwan's big airport, Nanya has land for three additional fabs. The company has also been exploring possible manufacturing sites in the U.S. as well as China, but no firm decision is expected soon on fabs outside of Taiwan. Fab 4 is on the drawing boards--probably in Linkao-but the company isn't talking about that 300-mm facility yet.
What Nanya is focused on is explosive revenue growth in 2001. The company believes the second-half weakness in DRAM markets this year is a result of the market overheating in the second quarter and slower-than-expected PC sales this fall."
The industry saw tremendous growth in Q2. That was speculation and it occurred across the entire food chain--customers, distributors, and even module makers. They all started ordering in anticipation of significant shortages that were predicted for the third and fourth quarters," Hurley said. "When that did not materialize--and forecasts for PC shipments were overstated--the market went into a downward spiral.
"In hindsight, the demand in the second quarter was also unexpected, causing suppliers to overreact," Hurley said. "Those wafers [from additional capacity] are still coming out of the factory, and that has put us in the situation we're in today."
But Nanya believes supply and demand will fall into balance in the second quarter. In the first quarter, some DRAM product segments will begin to shift into shortages, said Hurley, who believes servers and workstations will lead the market recovery. |
