PowerChip to produce Data Flash chips in 2004

Taipei, Dec. 1, 2003 (CENS)—Taiwanese chipmaker PowerChip Semiconductor Corp. (PSC) recently decided to produce the lucrative Data Flash memory chips beginning in the second quarter next year in cooperation with Japanese counterpart Renesas Tech.

According to PowerChip chairman Frank Huang, quotation price of 1G Data Flash memory chips has recently surged to US$38 apiece from US$17 in July while production cost currently stands at only US$7 a chip. Market research organizations, he said, estimated the market to post an annual growth rate of 30% to 40% over the next five years and the supply is now about 30% short of demand as a whole.

Booming demand for the chips from digital camera, mobile phone and mini disk sectors are estimated to push up Data Flash's market value to US$15 billion in 2008, staying on par with DRAM (dynamic random access memory) market value.

PSC will produce the profitable chips with 0.13-micron process at its 12-inch silicon-wafer fabrication plant, or fab. Initial output is projected at three million chips a month. Once it begins the production, it will be the first Taiwanese chipmaker to make the chip.

Huang estimated his company and Renesas to co-bag 15% of the world market of the chip next year, making them the world's third-largest supply team of the chip.

The world's second-largest supplier Toshiba is expanding capacity to challenge No. 1 player Samsung Electronics. Toshiba's new production lines will become operational in October next year, with initial output planned at 32.5 million Data Flash chips a month. It is planning to spend 150 billion yen on a 12-inch wafer fab to crank out the chips in 2006.

Huang pointed out that his company will earmark 60% and 40% of its 12-inch wafer capacity for DRAM and Data Flash memory production, respectively. Its eight-inch wafer fab will dedicate to built-to-order chips. He estimated the DRAM market to be better than expected in the first quarter next year on grounds that new corporate procurements of personal computers as replacements for older models are expected to appear next year.

Huang estimated his company's November revenue to reach NT$2.8 billion (US$82 million at US$1:NT$34) although DRAM prices slumped 5% from the October level. The company had October revenue of NT$2.9 billion (US$85 million).