Korean chip companies turn to foundry work to cope with downturn
By Anthony Cataldo
EE Times
(05/30/01 13:01 p.m. EST)
SEOUL, South Korea — Foundry services are becoming increasingly important to South Korea's semiconductor industry, partly as a means of utilizing aging fabs no longer useful for memory production. Hynix Semiconductor Inc., formerly Hyundai Electronics, and newcomer Dongbu Electronics Co. Ltd. are each making foundry work a key part of their strategies.
Chip manufacturers here and abroad commonly offer their manufacturing capacity to outside companies during lean times, when they have excess capacity. Hyundai Semiconductor had done "some foundry business, but it was kind of seasonal," said Youm Huh, senior vice president of Hynix's System IC business unit. But "after the merger [with LG Electronics], we selected foundry services as a strategic business."
The merger created a company with 13 fabs, capable of generating some 400,000 wafers per month. But only 25 percent of its capacity could handle the advanced design rules needed to be competitive in the DRAM business.
Near 80 percent
Hynix claims its logic utilization rate has fared better than most. Its logic fabs are 80 percent full and are producing devices for both outside companies and its own products, Huh said.
Hynix plans to compete with the Taiwanese on older logic process technology while devoting most of its capital spending to upgrading DRAM lines. Huh said many of its customers building systems such as consumer electronic equipment don't always need the tightest design rules.
"We have huge capacity, and a lot of our fabs are becoming mature. We can upgrade only a portion of it for memory products," Huh said.
Last year, Hynix converted two of its 0.35-micron DRAM fabs to logic by adding more metal layers. It plans to do the same with several 0.25-micron fabs over the next year. Huh believes that 0.25 micron, while not leading-edge, will be the most often used process technology for logic for the next two years.
Hynix has set aside 80 percent of its logic capacity for foundry customers. To minimize conflicts arising from foundry customers and internally developed products, the company has largely stopped pursuing ambitious chip development projects, which in the past had often ended up stillborn. Now, the company is concentrating on LCD driver chips, image sensors and some microcontrollers.
"We're focusing on what we can do better, based on our existing strengths," Huh said. "In the past our engineers tried to develop advanced system chips, but we have some clear limitations. Some of [those chips] are better done by U.S. companies."
So far, more than 100 companies are using Hynix to fab some of their chips. Foundry customers include Sanyo, Ricoh, Cirrus Logic, Cypress, Conexant, STMicroelectronics and Infineon.
Dongbu Electronics, for its part, had originally planned to build DRAMs based on technology it had licensed from IBM, but its plans were thwarted by the Korean government, which responded to the Asian financial crisis by discouraging new investments in DRAM fabs.
Instead, Dongbu struck a licensing deal with Toshiba to build a replica of the Japanese chip giant's logic manufacturing line and to provide 30 percent of its capacity to Toshiba. Dongbu started making its first chips in April and now produces 5,000 wafers per month. It plans to ramp production up to 40,000 wafers per month by the end of 2002.
Aside from its main partner, Toshiba, Dongbu has one customer in Korea and one other based in the United States. While still a small player, the company already has cleared out an area for a second fab nearby that could go up in three years.
"We don't plan to be a giant, but we want to be a certain size to be independent," said Wi-Sik Min, chief operating officer for Dongbu. "Our 10-year plan is to have seven fabs, but we really need two to three fabs to be competitive."
The foundry industry has taken it on the chin this year because of the downturn in PC and telecommunications equipment. But Min said the timing is right to build a foundry business, "because the first year, you're going to lose money anyway. And you can buy the tool sets cheaper [in a downturn]. We'll be well-prepared for a good market."
To woo customers, Dongbu is offering Toshiba-developed standard logic, mixed-signal capability and embedded flash modules. The company also has access to general and special-purpose circuits from Toshiba, including some macros, I/Os, phase-locked loops, A/D converters and codecs.
Dongbu's licensing agreement with the Japanese company covers 0.25-, 0.18- and 0.13-micron process technology nodes. The fab lines will be nearly exact replicas of Toshiba's fabs down to the type of equipment used, Min said. |
