Powerchip factory shifts into high gear

Powerchip Semiconductor Corp (力晶半導體), the world's sixth-largest maker of computer memory chips, yesterday started mass production at its second 12-inch (300mm) wafer factory. The company said this will help to reduce costs further.

With the second factory going into full operation, "Powerchip further proves that it is the most cost-effective DRAM [dynamic random access memory] maker among its peers," a local cable TV channel quoted chairman Frank Huang (黃崇仁) as saying at a launch ceremony held in Hsinchu yesterday.

Powerchip plans to spend a total of NT$60 billion (US$1.9 billion) at the plant, located in the Hsinchu Science-based Industrial Park (新竹科學園區). The plant currently has a monthly output of 15,000 wafers, but the company aims to boost production to 30,000 wafers by the year's end and eventually to 40,000 wafers per month, the company said in a statement.

To further trim costs, Powerchip will cooperate with its long-term partner Elpida Memory Inc of Japan in developing more advanced technologies to lower the line-width of its chips to under 110 nanometers per unit at the new fab, company president Brian Shieh (謝再居) said in the statement.

Shrinking the size of the chips allows manufacturers to fit more of them onto a single wafer, leading to a reduction in costs.

Huang said that his company will carry on with its original plan of investing another NT$20 billion to build more 12-inch fabs in Taiwan.

Powerchip told investors in April that it plans to build a new fab every two years until 2010. The company plans to spend US$1.3 billion on new facilities this year.

Construction of its third fab is scheduled to begin by the end of this year at the earliest in Hsinchu -- if the government overcomes the land-acquisition problem, Powerchip spokesman Eric Tang (譚仲民) told the Taipei Times yesterday.

Compared with its rapid expansion at home, the chipmaker's ambition to tap into the fast-growing Chinese semiconductor market has been frustrated by its failure to gain government approval to build a factory in China using less advanced technologies.

"We haven't heard any good news from the government [about the Chinese investment]. No progress has been made yet," Tang said.

Late last year, Powerchip and smaller rival ProMOS Technologies Inc (茂德) filed applications to the government to relocate an 8-inch (200mm) fab to China. Taiwan Semiconductor Manufacturing Co (台積電) is still the only Taiwanese chipmaker that is allowed to make chips in China.

The government has slowed efforts to ease the ban on new investments in China after Beijing enacted the controversial "Anti-Secession" Law in March.

Powerchip shares have fallen around 15 percent to NT$22.1 since the beginning of the year on the nation's over-the-counter market, or GRETAI Securities Market (櫃台買賣中心), due to falling chip prices.