Novatek, Himax Place Chip Orders With Hijiang and TSMC's China Factory

Taipei, Oct. 26, 2005 (CENS)-- Novatek Microelectronics Co., Ltd. And Himax Technology Inc., two leading Taiwanese microchip design houses, have recently placed foundry orders with mainland Chinese chipmaker Hejiang Technology and a mainland factory run by Taiwan Semiconductor Manufacturing Co. (TSMC).

The two designers specialize in drive Ics for liquid-crystal displays (LCDs). Novatek is a reinvested unit of foundry giant United Microelectronics Corp. (UMC), which is a close partner of Hejiang, and a major chip supplier for LCD maker AU Optronics. Himax is an affiliate of Chi Mei Group of Taiwan, which is known for thin-film transistor liquid-crystal display (TFT-LCD) panel production.

Novatek and Himax have both long depended on UMC's and TSMC's Taiwan factories for silicon-foundry services. The shifting of their orders to mainland China, Taiwan's industry watchers point out, suggest they have to decided to source chip production services to the mainland in order to stay in close proximity to their customers' factories there. Chi Mei and AU are currently running liquid-crystal module (LCM) factories in the mainland.

Mainland Chinese chipmakers point out that Taiwan's foundry orders from drive-IC designers have largely migrated to mainland Chinese manufacturers as a result of the mainland's less-expensive 0.25-micron process service and its advantageous tax credits. In addition to Novatek and Himax, Solomon Systech Ltd. Of Hong Kong, a drive-IC affiliate of Taiwan's Quanta Group, has contracted mainland Chinese chipmaker Semiconductor Manufacturing International Co. (SMIC) to build its chips.

The chipmakers add that the 0.5-micron process at the mainland's 150-mm wafer factories and the 0.35-micron process at the mainland's 200-mm wafer fabs are as mature as those at Taiwan's competing factories, making actual production very similar, whether in Taiwan's factories or the mainland's factories. Accordingly, mainland China's lower costs are naturally more attractive to Taiwanese designers.

Mainland Chinese display suppliers note that the rising chip industry there has also lured many Taiwanese vendors of drive Ics to contract the mainland's chipmakers to make their chips, so that they can promptly deliver the chips to customers with nearby factories.