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Technology Stocks : MEMC INT'L. (WFR -NYSE) The Sleeping Giant? -- Ignore unavailable to you. Want to Upgrade?

To: olduvai5 who wrote (2953)	1/22/1998 5:50:00 PM
From: Scotsman	Respond to of 4697

Here's that Taiwan story Taiwan's Wafer Foundries Flourishing (8:30 a.m. EST, 1/14/98) By Andrew Maclellan Taiwan's flowering foundry business could benefit from the economic troubles ailing South Korea and Japan, capturing market share by outspending competitors on new process technologies, according to one of the island's largest pure play IC manufacturers. A virtually unknown market concept 10 years ago, wafer foundries are expected to generate $22.8 billion in 2001 revenues while enjoying a compound annual growth rate of 27.4%, analysts predict. At the same time, foundry manufacturing will account for nearly 8% of the total worldwide chip market, almost twice today's share. The pure play foundry industry is being driven by a rise in fabless semiconductor companies which are looking for the economies of scale of a large manufacturer without necessarily having to spend a billion dollars or more on a wafer fab. Instead, smaller companies - and even some with hundreds of millions of dollars in annual revenue - have contracted with Taiwanese firms to secure a reliable stream of silicon wafers. The match generally benefits both companies by removing a large capital burden from the OEM chip vendor while affording the foundry a broad and relatively stable customer portfolio. "The fabless industry and the dedicated foundry have had a complementary relationship," said Don W. Brooks, chief executive of international operations for Taipei's United Microelectronics Corp. (UMC), and a company director. "In the past it's been a winner, and it will be a winner going forward. It's a natural thing." Meanwhile, debt-burdened chip makers in Japan and Korea are grappling with a currency crisis which is taxing their ability to service vast overseas loans and maintain capital spending levels, even as their chief semiconductor export - DRAM - limps into its third year of oversupply. With the competition battling its own demons, Taiwan's chip houses believe the strength and breadth of their customer relationships are enough to propel them ahead of their neighbors to the north. UMC, for example, plans to spend more than $18 billion to bring at least one new 8-in. or 12-in. wafer fab on line during each of the next 10 years, according to Brooks. "The problems that exist in Asia have resulted in a liquidity issue. This means that Korea and Japan will not keep pace which to some extent will result in a capacity shortage," Brooks said. "This presents a tremendous opportunity for Taiwan to pick up market share. They have refined their technology over the last seven years, they have money in the bank, and have a very good debt-to-equity ratio. There is nothing that they lack." Indeed, the increased business has enabled Taiwan's foundries to furnish OEMs with a menu of process technologies, design services and specialized production tools, while at the same time closing ground on process technology leaders like Intel Corp. and IBM Corp. UMC is ramping up pilot production of its 0.25-micron process this quarter and plans to move to pilot production of a 0.18-micron design geomtery in the second quarter of 1999.