Two chipmakers plan to build US$2.2bn fab

Infineon Technologies AG and Nanya Technology Corp (南亞科技) will build a 2.2 billion-euro (US$2.2 billion) factory for producing computer-memory chips as they seek to reduce development and production costs amid an industry slump.

Infineon, Europe's second-largest chipmaker, and Nanya Technology will each spend 550 million euros on the plant during the next three years, said Infineon spokeswoman Katja Schlendorf.

The Taiwanese factory will produce its first 12-inch, or 300mm semiconductor wafers in late 2003.

"The remaining 1.1 billion euros will come from outside investors that aren't semiconductor companies," said Nanya Technology Executive Vice President Charles Kau (高啟全), in an interview.

Semiconductor makers have teamed up to reduce development and production expenses as computer sales slump and prices for some chips remain below cost. Infineon has started ventures with Taiwanese chipmakers after plans for a project with Toshiba Corp fell through last year.

"It's an intelligent solution," said Theo Kitz, an analyst at Merck Finck & Co, which rates Infineon "outperform." "A new factory is very expensive," he said.

Nanya Technology, Taiwan's No. 1 computer-memory chipmaker, and Infineon earlier this year signed a preliminary accord to build a factory that can cut production costs by fitting more chips on one wafer. They expect banks to provide additional funds within 18 months and don't need more money now to start the project, Kau said. Infineon's Schlendorf declined to comment on the financing.

Nanya Technology may seek to raise funds for the plant by selling shares. Nan Ya Plastics Corp (南亞塑膠), its parent company, yesterday scrapped plans to sell about 3 percent of Nanya Technology's shares to international investors. Nanya Technology plans to sell 350 million new shares in Taiwan this year as an alternative, Kau said.

Most of the money to build the plant will be spent during 2004 and 2005 to bring it to full production capacity, Infineon said in a statement.

In Taiwan, Infineon has been trying to take over chip production capacity at its joint venture with Mosel Vitelic Inc (茂矽) after it canceled an agreement defining the terms of the accord in October. Infineon also signed a preliminary production agreement with Winbond Electronics Corp (華邦電子) in March.