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To: DJBEINO who wrote (9012)	12/12/2000 7:37:02 AM
From: DJBEINO	Read Replies (1) \| Respond to of 9582

Taiwan Macronix invests in Israel's Tower (UPDATE: Updates with signing, adds details, quotes) By Michael Kramer TAIPEI, Dec 12 (Reuters) - Taiwan memory chip maker Macronix International Corp signed a deal with Tower Semiconductor Ltd (NasdaqNM:TSEM - news) on Tuesday to take a 10 percent stake in the Israeli made-to-order chip manufacturer, or foundry. Macronix, which makes non-volatile memory chips that retain information even when they are turned off, said the deal would secure it capacity in Tower's second silicon wafer fabrication facility, which is due to be completed in 2002. The deal also gives the Taiwan firm a seat on Tower's board. The investment would give Macronix up to 5,000 eight-inch wafers capacity by 2002, even though the Taiwan firm's aggressive capacity expansion plans were already being questioned due to a downturn in microchip prices. Prices of flash memory, mostly used in mobile phones, have slipped this year as optimistic forecasts for handset sales turned out to be off the mark. But Macronix, which makes only two to three percent of the world's flash memory, said it sells to niche markets like digital versatile disc players, rewriteable compact discs, printers and digital cameras -- customers that have seen no decline in demand, and pay up to a 50 percent premium over other flash memory users. NO PRICE DECLINE ``We are actually seeing no softness in our flash,'' said Macronix President Miin Wu. ``In the next two years, Macronix can see abundant customer demand, but in next year and the year after our own capacity expansion is limited,'' he told a news conference. Wu said the shortage of capacity would lead Macronix to contract Tower's existing six-inch fab for production in the meantime, gaining additional output from the Israeli company's second plant and its own third plant by 2002. He also said the US$75 million cash investment would be paid in six installments based on progess in Tower's second fab plant. Macronix's headquarters lies in the same industrial park as the world's two largest and most-advanced foundries -- Taiwan Semiconductor Manufacturing Co (NYSE:TSM - news) and United Microelectronics Corp (NYSE:UMC - news). But Tower says its micro-flash technology packs five times as much density in memory chips as competitors, making it particularly appealing to Macronix. Macronix ``will have a particular interest in our project because we will be unique with this kind of capability in our fabs,'' said Yoav Nissan-Cohen, Tower's co-chief executive officer. Tower's US$1.5 billion second fab will have total output of at least 33,000 wafers per month, Nissan-Cohen said. Macronix currently has two plants in Taiwan, with combined output of 75,000 wafers per month. It is building a third plant due to begin production in early 2002. Macronix shares gained T$0.70 to T$49.60 on Tuesday, while Tower's Nasdaq-listed shares added US$2-3/16 to close at US$16-11/16 on Monday. biz.yahoo.com