Thu, Sep 23, 2004 - Page 10 News List

Renesas increasing local outsourcing with Powerchip

By Lisa Wang  /  STAFF REPORTER

Renesas Technology Corp, a joint venture of Hitachi Ltd and Mitsu-bishi Electronic Corp, is accelerating its outsourcing to top domestic memory chipmaker Powerchip Semiconductor Corp (力晶半導體) as part of its efforts to boost its market share, a company executive said yesterday.

Powerchip now is the only contract chipmaker supplying flash-memory chips to Renesas, the world's No.3 chipmaker.

"We will extend our partnership with Powerchip. We'll outsource as much as they can take," Renesas vice president Hideo Inayoshi said.

Flash-memory chips are used in devices such as digital cam-eras, MP3 players and multimedia cellphones for data or program storage.

Inayoshi said that closer ties with the Taiwanese chipmaker is part of a broader plan to improve Renesas' market position to around 10 percent over the next few years. Tokyo-based Renesas will also boost its own production capacity to help increase its market share, he said.

A 300mm fab, which now produces 15,000 wafers per month, is scheduled to increase production by the end of this year to double its output, Inayoshi said.

The Renesas orders are expected to account for 10 percent to 15 percent of Powerchip's total sales for next year, Powerchip president Brian Shieh (謝再居) said at an investors conference in July.

Sales to Renesas are very limited this year, said Powerchip spokesman Eric Tang (譚仲民), adding that the company was still in pilot-run phase for the flash memory business. Approximately 80 percent of Powerchip's sales come from memory chips for computers, Tang said.

"I tend to be conservative about the Renesas deal as Powerchip has lagged behind schedule to supply chips to the Japanese chipmaker, probably due to technology problems," said Wang Bou-li (王博立), who tracks memory chip industry for SinoPac Securities Corp (建華證券).

Late last year, Powerchip said shipments to Renesas would begin in the middle of this year.

Wang said he did not calculate Renesas's contribution when modeling Powerchip's financial projection for this year.

According to Wang's forecast, Powerchip will earn NT$26.02 billion in pre-tax income on revenues of NT$56.47 billion.

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