Flash memory chip maker Macronix International Co's
On Monday, Macronix signed a five-year manufacturing and technology cooperation agreement with Tower Semiconductor Ltd. In the agreement, Tower is to supply Macronix with IC wafers, and the two companies are to cooperate in the development of microFLASH-based manufacturing processes. The special process allows for the integration of large flash arrays in embedded applications.
Macronix is the largest mask ROM manufacturer in the world and a leading supplier of flash memory chips, which are used in digital cameras, mobile phones and personal digital assistants.
Based on the agreement, Tower will start to supply Macronix with 2000 six inch wafers in the fourth quarter of the year, and then 5,000 wafers from the beginning of next year, a securities analyst said.
Allen Tsai, an electronics analyst at Barits Investment Services, said the increased capacity would help Macronix meet the currently very strong demand for flash memory chips. "It's a quick way to increase output," he said.
Macronix will also ramp up production at its own No.2 wafer foundry to 30,000 wafers per month in August, and 40,000 wafers in September. Its new wafer plant is not expected to be operational until the end of next year. But while the supply of wafers from Tower might help Macronix plug its shortfall of wafers, its contribution will be limited, analysts said.
"Tower's output is very small," said Don Floyd, technology analyst at CLSA Emerging Markets.
Although technically the world's fourth largest build-to-order chipmaker, Tower posted revenue of US$47.9 million in the first six months of the year. In July alone, TSMC's revenue came to US$482 million.
As a result of its size and its low operating efficiency, the contribution Tower will make to Macronix' revenue next year will be very limited, an electronics analyst at a local securities house said. "I think it will account for only about five percent of revenue," she said.
Don Floyd said Macronix' interest in Tower may therefore go beyond just outsourcing production. "In some ways, it's a good fit," he said, because Tower does have technology which Macronix is interested in.
In a statement issued following the agreement, Miin Wu, chief executive officer of Macronix, said that because his company has been focusing on non-volatile memory solutions for its customers, it was happy to cooperate with Tower based on its microFLASH technology. Tower was also happy because the technology cooperation would enable Tower to enter into advanced microFLASH products before the construction of its planned Fab 2 plant, said Dr Yoav Nissan Cohen, co-chief executive officer of Tower Semiconductor.
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