PSC Expected to Benefit From Elpida' s Output Expansion Plan

Taipei, March 24, 2006 (CENS)--PowerChip Semiconductor Corp. (PSC) will likely become a key beneficiary of Elpida Memory' s plan to expand its output, which is aimed at doubling the output of memory chips for use in cellphones by the end of this year.

Industry watchers expect Japan' s Elpida to farm out part of the production to the Taiwanese chipmaker because Elpida' s output capacity at its 300-mm wafer fab is likely not enough to support its plans to expand. PSC and Elpida are long-term partners.

The watchers point out that market for cellphone memory chips looks to be promising as third-generation handsets become more popular. They noted that compared with memory chips for personal computers, the chips for cellphones will be more profitable, since the supply is smaller and the higher-end 90-nm process has emerged as the major manufacturing technology for the phone chips.

PSC is now operates two 300-mm foundries, which turn out a combined output of about 70, 000 chip wafers or so a month. Around 30% of PSC' s production goes to Elpida. With PSC planning to boost output in the second half this year, Elpida may possibly increase its orders from the Taiwanese chipmaker.

PSC reported after-tax earnings of NT$6.4 billion (US$200 million), or NT$1.2 per share, on revenue of NT$51.6 billion (US$1.6 billion) for last year.

Elpida had net earnings of 2 billion yen (US$17 million at US$1:116 yen) last quarter, and is forecast to earn 2-4.2 billion yen (US$17-36 million) this quarter. In addition to PSC, the Japanese chipmaker' s other overseas contract supplier is Semiconductor Manufacturing International Co. (SMIC) of mainland China. SMIC and PSC accounted for a combined 12% of Elpida' s outsourcing production.