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To: Maya who wrote (10)	11/27/1997 12:45:00 AM
From: Stoctrash	Read Replies (2) \| Respond to of 324

Acer Plans To Enter IC Foundry Business By Mark LaPedus techweb.cmp.com In a surprising move, Acer is entering the pure-play, IC-wafer foundry business by planning to break ground on a new fab next year. The $1.3 billion fab, which will be capable of processing 6- and 8-inch wafers, is expected to be completed by 1999. It will be located in the so-called Acer Aspire Park in the city of Lungtung, just outside Taipei, according to a spokeswoman for Acer, Taiwan's largest PC maker. By 1999, Acer also plans to build a new IC test and assembly plant. To get the ball rolling, Acer said it hopes to purchase some used 6-inch wafer processing equipment owned by its DRAM joint-venture partner, TI-Acer, in Hsinchu. The DRAM venture between Dallas-based Texas Instruments and Acer is a separate entity from Acer's new wafer-foundry company. TI-Acer itself recently shut down its older-generation, 6-inch fab lines, and next month or so plans to auction off the production equipment to several bidders, including Acer, TI, and other chip makers, according to a spokeswoman from TI-Acer. "Irregardless if we get the equipment or not from TI-Acer, we still plan to build the wafer fab,'' said the spokeswoman from Acer. Initially, Acer plans to have an older-generation, 6-inch fab that will make commodity-level, logic ICs, one source close to the company said. In the future, however, Acer will upgrade the fab to produce 8-inch wafer, the source said. ''There is still a lot of money in making lower-end, logic parts on a foundry basis, even on a 6-inch line,'' the source added. Disagreeing is Donald Floyd, an analyst with ING Barings Securities Taiwan, in Taipei. "Acer is late in the game in the foundry business,'' Floyd said. ''Besides, there's too much 6-in. capacity in the world right now. The real money in the foundry business is in leading-edge, 8-inch capacity. So I don't expect Acer will ever be a real contender in the foundry business.'' Still, Acer said it hopes to capitalize on the booming wafer-foundry business. For example, Taiwan Semiconductor Manufacturing Co. recently revised its 1997 sales and profit upwards due to huge demand for its wafer-foundry services. And TSMC's rivals, including Singapore's Chartered Semiconductor Manufacturing Pte. and Taiwan's United Microelectronics, are running at near or full capacity at the present time. At the same time, Acer has experienced some ups and downs in its DRAM venture with TI. After reaping huge profits in the early- to mid-1990s, TI-Acer has recently fallen on hard times due to the global downturn in the DRAM business. ''TI-Acer is burning a hole in Acer's income statement,'' Floyd said. This year, TI-Acer is projected to report a loss of about $56 million on sales of around $375 million. This compares with a profit of about $31 million on sales of $468 million in 1996. Other Taiwan DRAM makers are looking at the foundry business to offset losses in their memory businesses. Last month, for example, Taiwan DRAM start-up Nan Ya Technology, based in Taoyuan, announced plans to move into the foundry business. Other Taiwan DRAM houses are expected to follow.