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To: Don Green who wrote (73220)	5/18/2001 1:42:05 PM
From: Don Green	Respond to of 93625

Mosel Vitelic delays DRAM projects By Mike Clendenin, EE Times May 17, 2001 (11:52 AM) URL: eetimes.com TAIPEI, Taiwan — DRAM maker Mosel Vitelic Inc. is shelving plans to build two 12-inch wafer fabs in Taiwan and Canada because of the sickly nature of the memory market. The company joins a host of others inside and outside Taiwan that have deferred expansion plans because of the semiconductor slowdown. Yet while plans of expansion have dimmed in the short-term, one slice of good news for the company is that its subsidiary will be among the first of the Taiwanese DRAM makers to migrate below 0.17-micron process technology. ProMOS Technologies, a joint venture between Mosel-Vitelic and Infineon Technologies AG, has pushed ahead the opening of its 12-inch wafer fab by a few months, to December of this year, with volume runs planned for the first quarter of 2002. The new fab will use a 0.14-micron process to produce 128-Mbit and 256-Mbit DRAM. That puts ProMOS just ahead of competitor PowerChip Semiconductor, which plans to have its 12-inch line up and running in the second quarter next year using a 0.15-micron process. Nanya Technology and Vanguard Semiconductor won't be using sub-0.17-micron process technology at 12-inch fabs till 2003. Dismal pricing for DRAM is making the need to shrink even more pressing for Taiwan's memory manufacturers, which accounted for 11 percent of the world market last year. Nanya felt the pinch in its bottom line in the first quarter, losing $50 million, in part because it was still producing a large part of its DRAM using 0.20-micron or higher process technology. "We were a little late in making the transition, but most DRAM will be at 0.17 this month," said Charles Kau, executive vice president at Nanya. But making the shrink, in many cases, is tied to opening new 12-inch lines for the island's main memory makers. The conundrum of doing so in such a weak market is aptly illustrated at Mosel Vitelic, which is reluctant to spend the capital and has opted for a compromise by relying on ProMOS to keep it cost-competitive in the process migration race. "Since DRAM manufacturers cannot see a bright future at the moment, conservative action is the best policy now," said Mike Liang, vice president of operations at Mosel Vitelic. On the other hand, the company is eager to get the cost savings from the shrink at ProMOS, which handles most of its mainstream DRAM manufacturing. "The sooner we ramp up this fab, the sooner we can start cost savings," said Len Mei, vice president of manufacturing at ProMOS. "The shrink alone will give us 33 percent savings." According to the ProMOS road map, the company will push aggressively to introduce 0.11-micron manufacturing by the end of next year. Because the firm did not add much capacity last year, and doesn't plan to this year either, Mei said the company risks losing market share. "So we cannot afford to delay the 12-inch," he said. But others have delayed, such as Winbond Electronics. Originally scheduled to break ground in the first quarter in the Tainan Science Park in southern Taiwan, the $3.6 billion project was postponed. The company cited worries over vibrations from a nearby train project, not market conditions, as the reason. On Wednesday (May 16), the company said it hopes to start construction by the end of this year and maintain its schedule for bringing the plant online in the first quarter of 2004, using a 0.11-micron process for 1-Gbit DRAM. Before that, in the second half of next year, it will migrate to 0.13-micron process technology at its two 8-inch wafer fabs in Hsinchu. Also at the tail end of the shift to 12-inch is Nanya, which won't have a plant operational till the second half of 2003. Construction starts at the end of this year. Nanya will, however, transition to a 0.14-micron process during the first half of next year, which will coincide with the predicted ramp-up of double-data-rate DRAM. Nanya is an early supporter and supplier of DDR, but it is trading pricing blows with Idaho-based Micron Technology. The heavyweight of memory is transitioning to 0.15-micron this year, giving it an early edge over Nanya.

To: Don Green who wrote (73220)	5/18/2001 5:07:21 PM
From: Dave B	Read Replies (2) \| Respond to of 93625

Memory prices have been heading downward since the beginning of the year due to excess supply. Major memory chip producers have made aggressive price cuts to head off sluggish demand for DDR caused by a PC sales slowdown. Thus far DDR SDRAM price cuts have not yielded increased sales, but they have slimmed profit margins for DRAM producers in an already depressed market. Many producers struggle with inventory backlogs of older products and seem to cut prices just to drive volume sales. ... Though the price cuts may drive acceptance of DDR, major DRAM manufacturers could hurt their own pockets in the long run, said IC Insights senior analyst Brian Matas. "Micron could shoot themselves in the foot," said Matas. "They'll sell more units, but at lower prices and this will hurt their profits, at a time when profits are already tight." Normally, I'd agree with this last statement -- by the time DDR systems show up in volume (if ever), there won't be any profit to be made on DDR, either -- except that if Micron doesn't get the DDR volume bandwagon rolling soon, they'll be in an even bigger world of hurt with just (unprofitable) SDRAM to sell. So, at this point, they really need to do anything and everything they can to encourage the adoption of DDR as the next standard. They have no choice.