TAIPEI (XFN-ASIA) - Powerchip Semiconductor Corp (5346.TW) and Japan's Elpida Memory Inc have decided to form a 50-50 joint venture worth over 40 bln twd initially, the two companies said in a joint statement.
In the initial stage, the joint venture will acquire Powerchip's new 12-inch-wafer plant, which is still under construction in Houli, central Taiwan.
'In total, we two are ready to invest a combined 450 bln twd, or 136 bln usd, over the next four to five years in building four (12-inch-wafer) fabs in central Taiwan,' Powerchip Chairman Frank Huang said.
The four fabs will have a monthly capacity of 60,000 wafers each, or a total of 240,000 wafers per month, he said.
The Powerchip-Elpida joint venture is due to start production using 70-nanometer technology and will work together toward moving to the more advanced 50-nanometer phase and beyond, he added.
'(By teaming up with Powerchip), we want to become the world's No 1 DRAM alliance in three years,' Elpida President and CEO Yukio Sakamoto said.
The Powerchip-Elpida joint venture is set to make further inroads into the commodity DRAM market, he added.
The Elpida CEO said his company will focus on getting the joint venture with Powerchip off the ground in the foreseeable future, and has no other plans to expand overseas for now.
Having built a four-year partnership with Powerchip, 'I have become more intimate with (Frank) Huang than with my wife,' Sakamoto added in jest.
In his statement, Huang said: 'We must thank (Elpida's) Sakamoto for choosing Powerchip over China and Singapore as its partner in setting up a production site overseas.'
Powerchip is particularly grateful to Elpida's decision, given Taiwan's inferior investment environment compared with China and Singapore, he said.
The government should consider dropping its restrictions over China-bound investments and ideological interference in economic affairs to encourage even more foreign investors to invest here, he added.
Huang said Elpida decided to join Powerchip's 12-inch-wafer expansion project in central Taiwan initiated in March mainly with a view to its superior efficiency in making DRAMs at competitive costs.
The Powerchip-Elpida joint-venture fab in central Taiwan is scheduled to start equipment installation in May 2007 and move on to mass production in August.
Huang said while Powerchip and Elpida will inject 20 bln twd each into the joint venture in 2007, his company will pay for whatever cost is incurred on the transfer of technology from its Japanese partner.
He said the Powerchip-Elpida joint venture will certainly consider an initial public offering when the time is right.
'Yes, we will consider an IPO so long as the first fab run wells.'
But first, he said, the joint venture plans to have capital expenditure of 70 bln twd in 2007 to expand the central Taiwan fab's capacity to 30,000 wafers per month.
Powerchip itself will have capital expenditure in 2007 of an estimated 2 bln usd, compared with 85 bln twd seen for 2006.
Separately, Powerchip spokesman Eric Tang said his company will 'consider' setting up a production site in China if the government approves its 2004 application for relocating its only eight-inch-wafer fab to the mainland.
Based on current regulations here, only the less advanced and thus less competitive 0.25 micron technology is allowed for making chips on the mainland.
'We will consider if it is feasible to make chips other than DRAMs even if (the more advanced) 0.18 micron technology is to be permitted,' he added.
In today's trade, Powerchip closed down 0.35 twd at 21.55.
(1 usd = 32.30 twd)
philip.wang@afxasia.com
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© 2006 AFX News
