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Technology Stocks : Applied Materials No-Politics Thread (AMAT) -- Ignore unavailable to you. Want to Upgrade?

To: Math Junkie who wrote (461)	11/13/2001 3:32:49 PM
From: Proud_Infidel	Read Replies (1) \| Respond to of 25522

Toshiba/Infineon DRAM merger fading fast By Faith Hung and Jack Robertson EBN (11/13/01 13:47 p.m. EST) Infineon Technologies AG is turning to Taiwan now that a possible merger of its DRAM operations with Toshiba Corp. has failed to materialize, according to well-placed industry sources. Infineon hopes to be among the handful of suppliers to weather the electronics industry's prolonged slump by snatching up troubled competitors and increasing its heft in the market. Initially, that strategy led Infineon to enter talks with Toshiba, which has been widely reported to be looking for a way out of the loss-ridden DRAM sector. However, a source close to the negotiations said the possibility of a merger between the two companies' DRAM businesses is fading given that the parties were unable to broker a preliminary agreement by the end of October as had been hoped. Sources said it was unclear if the talks with Toshiba hit a snag or if Infineon is exerting pressure tactics by courting Taiwan's troubled DRAM suppliers. It's likely that Infineon became disenchanted after Toshiba refused to include its flash memory business in the proposed joint venture, said a source close to the German chipmaker. Infineon and Toshiba declined to comment on the status of the talks. However, in Taiwan, where the top six DRAM makers have lost a combined $1.23 billion so far this year, several vendors said they have been contacted by Infineon on the subject of a merger. The company already owns a 47% stake in ProMOS Technologies Inc., a DRAM joint venture with Hsinchu-based Mosel Vitelic Inc., but may be interested in taking complete control of the operation or in merging with Mosel Vitelic itself, according to sources. “Many players in the industry have been thinking hard about how to boost their competitiveness. The answer is consolidation,” said Thomas Chang, vice president of Mosel Vitelic, which lost $179.5 million in the third quarter, extending its losses to $434.8 million in the nine months through September. “Infineon has talked to everyone in Taiwan about possible cooperation,” including Nanya Technology, Powerchip Semiconductor, Vanguard International Semiconductor, and Winbond Electronics, said Hander Chang, an assistant vice president at Winbond, who declined to elaborate. Each of Taiwan's DRAM producers licenses process technologies from overseas partners, making them vulnerable when the industry is in a downcycle. “In the global supply chain, all Taiwan can do is manufacturing,” which is at the low end of the chain, Mosel Vitelic's Chang said. A merger of Infineon with any of its rivals in Taiwan would do little to relieve the market's current supply glut or stimulate demand, but it would help Infineon raise its position in the industry, according to analysts. “The only benefit of such a merger would be to expand Infineon's market share,” said Albert Lin, director of the business operations division at ProMOS. “This is a war. Everybody is determined to kick each other out of the market and see who survives at the end of the game.” Infineon now owns about 8% of the world market in terms of DRAM unit shipments, trailing Samsung Electronics with 22%, Micron Technology with 20%, and Hynix Semiconductor with 17%, according to Nomura Securities Inc. in Taipei. Teaming with Toshiba or any combination of Taiwan vendors could give Infineon a larger critical mass to compete against these few industry heavyweights. Infineon executives a year ago said the company could be an effective competitor with a 10% market share. Analysts said the DRAM suppliers that join Infineon will have a better chance of survival, while those that are left out face continuing losses. “Some DRAM companies will end up just having to close their operations,” said Sherry Garber, an analyst at Semico Research Corp., Phoenix. “There aren't enough buyers out there to take over everyone who's in trouble. With new 300mm-wafer DRAM fabs coming on line, we'll probably need only five or six suppliers total to meet global demand.” Already, Taiwan's DRAM makers are showing stress fractures. Hsinchu-based Winbond, for example, has said it will shift to specialty DRAM over the next three years and dramatically increase its non-DRAM manufacturing. Winbond last week announced a flash memory development agreement with Sharp Corp. using the Japanese company's 0.18- and 0.13-micron Advanced Contactless Technology (ACT1), which Winbond claims can double flash-chip density. Production is slated to begin in the first quarter of 2004. “The industry trend isn't in favor of Taiwan,” said Rick Hsu, an analyst at Nomura. “Only the top three will be able to make money, and the rest will have a difficult time surviving.”

To: Math Junkie who wrote (461)	11/14/2001 8:32:13 AM
From: Proud_Infidel	Respond to of 25522

Dongbu Turns to Non-Memory Chips Dongbu Electronics, Korea's first and largest "pure-play" foundry service provider, has taken the country's semiconductor industry in a new direction by focusing on non-memory chips. Its foundry launch marks a new turning point at a time when the country's industry is shifting from DRAM to non-memory chips. In spite of its position as a global memory leader, Korea depends on imports for more than half of its non-memory chips. As the number of fabless design houses now exceeds 100, there is an increasing demand for foundry services. Dongbu's fullydedicated pure-play foundry services therefore serve to brighten Korea's new boom in non-memory chip development. Toshiba currently offers technological and capital investment to Dongbu, which attempted to become established in the production of memory chips in 1997, but which shifted its focus to foundry services following the drastic economic downturn linked to the country's IMF bail-out control system. The company started its foundry service at its class-1 line in Sweet Valley, near Seoul, in April this year. At 2.05 million sq m in size, the fab is fully equipped for mass production based on CMOS technology for 8-inch wafers. Aggressive Expansion Dongbu has so far secured 10 customers, both local and foreign. Plans in the pipeline include a second-round investment of US$750 million by the end of this year for its monthly production capacity of 20,000 8-inch wafers. Management is planning to expand this capacity to 45,000 wafers during the first quarter of next year. Another fab line will be constructed in 2003, and the company aims to have a total of seven fab lines by 2015. ( Sin-Hyuk Han), Dongbu's president, said that the company will concentrate on niche markets, and not on competing with Taiwan's foundry giants, during the early stages of business. "We want to beef up our sales to US$1 billion per year before going public," he said. "When additional fab lines are completed, we will be able to emerge as a global player with an annual sales value [of] US$10 billion." The company has recently obtained qualification approval for its 0.25micron CMOS mixed-signal process from Toshiba. It was aiming to obtain another qualification for its 0.18micron process in October, and plans to introduce a 0.13micron technology based on a copper process next year. Its 0.25micron mixed-signal process is available for CCD camera image sensors, Internet access controller ICs and telecom RF ICs. The company is about to diversify its service coverage to embedded ICs for products such as digital cameras, GPS and other IA products, and also to standard logics such as 3D visual chips and DSPs. by Jade Jin, Seoul (November 2001 Issue, Nikkei Electronics Asia)