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To: orkrious who wrote (21077)	2/11/1999 7:19:00 PM
From: FJB	Respond to of 25960

Foundry customers scurry to pin down 0.25-micron capacity By Mark Carroll EE Times (02/11/99, 4:45 p.m. EDT) eet.com HSINCHU, Taiwan — With Taiwan foundries reporting increased demand for their high-end services, wafer prices appear to have ended their freefall, and some fabless semiconductor companies are seeking to reserve capacity in writing. "Demand has definitely picked up since the beginning of this year," said Richard Chang, president of Worldwide Semiconductor Manufacturing Corp. (WSMC). "For our 0.25-micron process and below, we are seeing more demand than we can supply. Demand is such that we are planning on adding extra fabrication equipment this year so that we can raise our final capacity at our first fab from 32,000 wafers per month to 45,000 wafers per month." WSMC cranks out 8,000 to 10,000 wafers per month and is ramping up at a rate of more than 2,000 additional wafers per month. Chang said the company can make mixed-signal products down to 0.2 micron, logic and SRAM devices to 0.25 micron and DRAM to 0.21 micron. Business at Taiwan Semiconductor Manufacturing Co. (TSMC) is similarly improving. "Our utilization rate is up," said a company spokesman. "Certainly, this first quarter is better than that of the last quarter of 1998, and we hope the second quarter will be even better." 'Huge' quarter United Microelectronics Corp. is ramping up production at 0.25 micron and below. Those processes constitute "about 15 percent of our production," said Jim Kupec, vice president of marketing at UMC-America. But "by yearend, a third of our production will be at that kind of process level." As a result, UMC's "first quarter this year will be huge," said Kupec. "We expect the second quarter also to be up, but not as [much] as we are seeing in the first quarter. January was an all-time record for us in volume and dollar terms." Indeed, preliminary sales figures for January confirm that Taiwan's foundries are seeing an upturn. TSMC expects to report January sales of about $125 million. UMC should come in at about $62.5 million, as should Winbond Electronics Corp., according to company estimates. In all of 1998, UMC didn't have a single month with sales at that level. And the projection constitutes an historical high for Winbond. Securities analysts here concurred that Taiwan's foundries are in a much better position than last year. "Quarter-micron is hot now," said ING Barings securities analyst Don Floyd. "There is an increase in demand and a shortage of supply as far as the ability to actually manufacture parts at that process level and below." Another analyst, who asked not to be identified, also sees a definite turnaround. "Market dynamics aside, the message from our recent Hsinchu visits is that the semiconductor upturn is alive and well," he said. "Worried customers are asking foundries for MOUs [memoranda of understanding] to guarantee access to capacity. This has been unheard of in the last several years." Increased demand has prompted some foundries to increase prices. "Wafer prices are now going up 20 percent to 35 percent," said Chang. "It depends on the product and at what process it's made. I'm cautiously optimistic about the future." The TSMC spokesman was even more cautious, saying, "We haven't decided whether to raise the wafer price." TSMC, however, traditionally sells its wafers at a 10 to 20 percent price premium over the prices charged by other foundries here. UMC, for its part, "basically [sees] this increase in demand for quarter-micron as leading to a firming of prices," said Kupec. "We are also seeing the booking lead time move back out to about 12 weeks. In contrast, last year's booking lead time went down to as low as four weeks." Wafer prices may not be zooming up worldwide, but at least the slide that began last summer seems to have ceased. "Prices haven't gone up significantly yet industrywide, but they definitely have stabilized," said Floyd. "I get a sense that Taiwan's foundries are starting to feel a bit more confident now." Nonetheless, the industry is striving for a level-headed response to its reversal of fortunes. "I'll be happy if we can maintain the current price structure through this year as we continue to increase our quarter-micron volume," said UMC's Kupec.