Wed, Mar 27, 2002 - Page 17 News List

Nanya may be in talks with Infineon on chip production

By Dan Nystedt  /  STAFF REPORTER

Nanya Technology Corp (南亞科技) is in talks with Infineon Technolo-gies AG, Europe's largest DRAM memory chipmaker, Chinese-language media said yesterday.

Infineon has signed contracts with two other Taiwanese memory chipmakers, Mosel Vitelic Inc (茂矽) and Winbond Electronics Corp (華邦電子).

Infineon and Nanya may cooperate on a 12-inch wafer fabrication plant, the paper reported. The two would build the fab in Taiwan and Infineon would eventually add another 12-inch fab. Infineon would become Nanya's new technology partner for 0.11 micron technology, the report said.

Both companies denied the report.

"Yes, we are speaking with Nanya. Nanya is one of the partners we have always been in talks with ... although we have not finalized any contracts with them," Kaye Lim, a spokeswoman for Infineon, said.

A Nanya spokesperson said yesterday the company was in talks with Infineon. The spokesperson also said it plans to break ground on its own 12-inch wafer fab in the second quarter of this year.

The plants are expected to save companies up to 30 percent on manufacturing costs by enabling them to etch more chips onto each silicon wafer. But at US$3 billion a plant, most companies seek partnerships before building the fabs.

Infineon has already inked an agreement with United Microelectronics Corp (聯電) to build a 12-inch fab in Singapore, as has Advanced Micro Devices Inc, a US-based chipmaker.

Just a few weeks ago, Infineon signed capacity agreements with Winbond and Mosel, two local memory chipmakers. Under terms of their agreement, Infineon will license advanced manufacturing technology to Winbond beginning next year, gaining exclusive access to the memory chips using the technology.

The deal with Mosel involved Infineon increasing its investment from 38 percent up to 48 percent in a joint venture plant the firms built six years ago in the Hsinchu Science-based Industrial Park (新竹科學園區), ProMOS Technologies Inc (茂德科技). In return for both agreements, Infineon gained access to production output, necessary to keep the company in competition with the world's top two DRAM makers, Samsung Electronics of South Korea and Micron Technology of the US.

In the DRAM memory market, the ability to pour out massive amounts of chips is very important because it drives down the cost-per-chip. Nevertheless, wild price fluctuations result when companies try to unload excess inventory. Last year, DRAM sales plunged by two-thirds, from US$31 billion in 2000 to US$10.5 billion, according to Dataquest, a market research firm.

Analysts said the deal would only make sense for Nanya if it includes the company's technology partner, IBM.

"Infineon wants to establish strategic alliances because they need to keep up with Micron and Samsung, so such a deal would be reasonable," said Connor Liu, an analyst at SG Securities in Taipei. "But Nanya's technology partner right now is IBM -- so, if they want to work with Infineon, then what about IBM?"

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