PowerChip to set up chip-making plant in mainland China next year

Taipei, Nov. 4, 2003 (CENS)--PowerChip Semiconductor Corp. (PSC) mulls opening an eight-inch wafer fabrication plant in mainland China next year to ease its tight contract capacity. Investment capital amounts to between US$800 million to US$1 billion.

PSC chairman Frank Huang made the statement yesterday. He said his company's capacity has been strained since April or May this year and the capacity shortfall for niche memory chips will reach 20,000 to 30,000 wafers a month next year.

The PSC chairman analyzed that digital TV, cell phone, personal digital assistant (PDA), digital camera and optical-disk drive will be the major forces to drive up the demand for niche memory chips next year.

To cope with the shortage, his company will spend US$800 million to US$1 billion on new equipment next year and earmark US$600 million to US$800 million as part of the capital for its third 12-inch wafer fab in 2005. The firm's capital expenditure is estimated at US$600 million for this year.

PSC's second 12-inch wafer fab, Huang noted, will start volume production next year, making his company the world's fourth-largest supplier of dynamic random access memory (DRAM) chips trailing only Samsung Electronics, Micron Technology and Infineon Technologies.

Huang forecast his company and its affiliates to generate combined revenues of NT$100 billion (US$2.9 billion) next year. This year, his company and its affiliates are estimated to score combined revenues of NT$70 billion (US$2 billion), with PSC alone contributing NT$23 billion to NT$24 billion (US$676 million to US$705 million).

The company posted average earnings of NT$1.4 billion (US$41 million) in each of the first three quarters this year, paring down its accumulated loss to NT$1.7 billion (US$52 million) as of the end of the first half this year from NT$3.1 billion (US$93 million). Huang attributed the handsome gains to continuously improving defect-free rate at its first 12-inch wafer fab and processing technology. The factory's defect-free rate has topped 80%, and 90% of its capacity now uses 0.13-micron process. The factory plans to introduce 0.1-micron process at the end of this year.

PSC, Huang emphasizes, does not rule out teaming up with mainland Chinese chipmakers to acquire capacities in addition to building its own factory if the former formula has a cost advantage.