ProMos Technologies moves ahead with ambitious plan

Taipei, Jan. 20, 2005 (CENS)--ProMos Technologies Inc. has inked a partnership agreement with South Korean chipmaker Hynix Semiconductor shortly after submitting to the government for approval an application for transplanting obsolete chip-making facilities to mainland China.

The agreement with Hynix mostly addressed co-operation on dynamic random access memory (DRAM) chip production, with Hynix pledging to license its 70-nm process and 90-nm process technologies in the second half this year in exchange for ProMos' nod on offering its 300-mm wafer factory capacity. The two companies will co-develop 60-nm process technology sometime this quarter.

The cooperation is estimated to allow the two companies to win a combined 23% share of world DRAM market, the second largest portion of the market. Currently, Hynix is the world's second-largest DRAM supplier, controlling 18% of the world market.

Hynix executives pointed out that their company had followed the strategy of securing leading-edge production capacities by forming alliances with chipmakers running the capacities rather than spending big money on the costly facilities. Their company, they added, opted to team up with ProMos considering the Taiwanese chipmaker's excellent capability in managing a 300-mm wafer factory and its outstanding performance in the manufacturing.

Hyix had entered into alliance with European chipmaker STMicroelectronics on production of NAND-type flash memory chips. Taiwanese industry watchers expected Hynix, STMicroelectronics and ProMos to form the world's largest memory-chip group.

M.L. Chen, chairman of ProMos, pointed out that his company would use its 300-mm wafer factory to produce memory chips for contract market, which he said is much more valuable than spot-market chips. He added that his company had won at least 1,300 technology patents, more than the number each owned by domestic rivals PowerChip Semiconductor and Nanya Technology.

ProMos delivered application for government approval on its plan to move old chip-making equipment to mainland China to lure orders there. Chen said the old equipment would produce niche products bearing its own brands instead of commodity products contracted by other suppliers.

The company's executives said their company would follow the model Taiwan Semiconductor Manufacturing Co. (TSMC) dealt with its mainland Chinese factory in its project. TSMC, currently the world's No. 1 pure-foundry suppler, constructed its factory before acquiring rent approval from the mainland authorities. The TSMC factory began production late last year, with process technology no better than 0.25-micron node.

So far, TSMC and ProMos have been the only two Taiwanese chipmakers to acquire approvals from the government here on plans to transfer old facilities to the mainland based on the idea of exploiting the value of old equipment in face of competition from the rising mainland Chinese rivals.