Powerchip to build eight-inch memory fab in China

Powerchip Semiconductor Corp (力晶半導體), the nation's biggest maker of memory chips for computers, yesterday decided to build a less advanced plant in China in a move to boost its market share.

Powerchip's move came after smaller rival ProMOS Technologies Inc (茂德科技) on Tuesday filed an application to the government to set up an eight-inch wafer fab in China, as the government is moving to further ease restrictions on chip investment across the Taiwan Strait.

"China is a market with potential, which cannot be ignored by most companies, including Powerchip," said Powerchip spokesman Eric Tang (譚仲民). "We want to grasp that opportunity. With the Chinese investment, we hope to strengthen our market position."

Powerchip ranked No. 6 among the world's dynamic random access memory (DRAM) chipmakers with a 4.7 percent share, according to market researcher iSupply Corp's statistics last month.

Tang said his company planned to file the application before the first quarter of next year, with total investment capped at NT$13 billion.

ProMOS said the proposed chip plant may cost between US$800 million and US$900 million, but the company hasn't yet chosen a site for the project, according to a Chinese-language newspaper report, citing company spokesman Albert Lin (林育中).

ProMOS would produce memory chips used in liquid crystal displays at the factory, the newspaper said.

Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) was the first local chipmaker to get approval to build an 8-inch wafer plant in Shanghai early this year, after the government partially relaxed restrictions on Taiwan companies' chipmaking in China.

Powerchip's latest China-bound investment did not impress some industry watchers.

"I'm not excited about the news," said Robert Lin (林家宇), an analyst with Yuanta Core Pacific Securities (元大京華證券). "I don't see that there is any urgency for Powerchip to take this action."

The step is likely to pave the way for Powerchip to vie for a share in China's memory chip foundry market and diversify its less advanced 8-inch facilities. Most memory chipmakers are pursuing a similar strategy now that more and more DRAM chips are being manufactured at cost-saving 12-inch fabs, Lin said.

But the memory chip foundry business is turning sour as prices tumble due to a crowded field of competitors, such as the DRAM giant Samsung Electronics Co of South Korea, he said.

Powerchip shares edged lower 0.83 percent to NT$23.9 on the nation's over-the-counter Gretai securities market yesterday.