Shanghai Belling Sounds Out UMC to Jointly Build 8-inch Wafer Plant
August 20, 2001 (TAIPEI) -- China's state-owned Shanghai Belling Co., Ltd. confirmed its decision to scrap its plan to build a 6-inch wafer plant in Shanghai Zhangjiang Hi-Tech Park.
The company decided to build an 8-inch wafer plant in the location instead.
At present, the company is actively seeking a potential strategic alliance partner, from which it can acquire second-hand facilities that the new 8-inch wafer plant will need and related expertise and know-how. Taiwan's United Microelectronics Corp. is said to be one of the wafer powerhouses that Shanghai Belling has engaged into close contact.
Shanghai Belling, the first listed company in China's microelectronic industry, designs and manufactures integrated circuits used in programmed exchanger, telephone, electronic watt-hour meter, IC card, remote controller series in color TV and acoustics, switching power source controller, karaoke reverberation unit and fuzzy logic MCUs and other products. Presently, the total assets of Shanghai Belling are RMB 1.28 billion, of which Shanghai Huahong (Group) Co., Ltd. holds 38.45 percent of the total share, ranking as the biggest shareholder, while Shanghai Bell Co., Ltd. holds 25.64 percent, ranking as the second largest.
After Hong Li Semiconductor Manufacturing Corp. and Semiconductor Manufacturing International Corp. started construction of their 8-inch wafer plants in Zhangjiang Hi-Tech Park at the beginning of the year, China's state Shanghai Belling held a groundbreaking celebration for its 6-inch wafer plant, also Shanghai's third wafer plant, at the end of July.
With the 6-inch wafer plant gradually nudged out as worldwide semiconductor manufacturing technology is upgraded to 12-inch versions, Shanghai Belling decided to stop the 6-inch wafer plant construction, and transform it into an 8-inch wafer plant.
In lacking the experience and skill of operating an 8-inch wafer plant, Shanghai Belling is seeking tie-ups for venture capital and technology exchange partnerships. UMC is one of the potential partners that Shanghai Belling is trying to link up with. Separately, U.S.-based Conexant Systems Inc. and Texas Instruments Inc. are also on the list.
The contact between UMC and Shanghai Bell Group is not a new story.
At mid-June, UMC Chairman Robert Tsao led high-ranking executives of UMC and its several affiliated IC design companies on a low-profile visit to Shanghai. Several venture capital companies were said to have joined the tour, implying that UMC probably plans to invest in China. Shanghai's Zhangjiang Hi-Tech Park has reserved a specific district for UMC's possible decision to move into China. UMC seems to have modified its previous standoffish attitude about China-bound investment, as Robert Tsao has visited China many times so far this year.
UMC has not actively cultivated production in China, but has earlier investment there. In 1995, before transforming itself into a wafer foundry company, UMC set up a company to deal with the layout of IC design's backend solution, Sino Wealth Electronics Ltd., in Shanghai's Caohejing Hi-Tech Park.
Even though UMC is ostensibly uninterested in investment in China, in fact it has had close contact recently with Chinese authorities, which often invite UMC's top executives, such as its Chairman Robert Tsao and Vice Chairman John Hsuan, to visit China. Caohejing Hi-Tech Park's administration revealed in May that UMC's affiliated company Sino Wealth Electronics (Shanghai) Ltd. had applied for a vacant lot in Caohejing Hi-Tech Park and had received approval. The administration added the location reserved for Sino Wealth covered an area inadequate to set up a wafer fab plant, but sufficient to construct an office building.
Separately, UMC's link to Shanghai Bell Microelectronics Manufacturing Co., Ltd. was another focus of Tsao's visit in China in June. Shanghai Bell Microelectronics is an IDM company, which manufactures self-designed products, mainly ICs for industrial equipment. The company has one 4-inch wafer plant using the 1.2-micron manufacturing process.
Shanghai Bell Microelectronics is partly owned by the Shanghai metropolitan government, and one of its major shareholders is Shanghai Bell, a telecommunication and information enterprise founded in 1984 and a joint venture between the Chinese government, the Belgian Fund for Development, and Alcatel.
Shanghai Bell Microelectronics is said to have finalized a project to establish a 6-inch wafer plant in Shanghai Zhangjiang Hi-Tech Park last year, and sounded out UMC on the possibility of its participation in the investment. UMC's answer is not known.
Some market watchers surmise that UMC may set up a 6-inch wafer plant in China as the initial phase to strengthen its China-bound investment via the reinvestment link.
Others disagree, noting that Robert Tsao observed once that UMC had yet to unroll a layout in China because it saw 12-inch wafer plants as the key to its competitiveness in the near future, not low-end production lines, and is unlikely to be interested in a low-grade, 6-inch wafer plant. As a result, there is increasing speculation that UMC is likely to integrate Taiwan's IC companies to pave the way for the establishment of a research center in Caohejing Hi-Tech Park.
However, the policy change of Shanghai Belling, one of Shanghai Bell's affiliates, may have given UMC a second choice to move into China.
(Commercial Times, Taiwan) |
