ProMOS expects boost in output from new factory

ProMOS Technologies Inc (茂德科技), Taiwan's third-largest maker of memory chips for computers, yesterday said output would grow significantly next year after a second advanced plant started mass production recently.

ProMOS is catching up with rival Powerchip Semiconductor Corp (力晶半導體) by aggressively building cost-effective 300mm plants to boost profitability amid falling chip prices.

The operation of a second 300mm plant would "allow ProMOS to achieve a bit-growth rate of 80 percent in 2006 [from this year]," company chairman Chen Min-liang (陳民良) said during the inauguration ceremony yesterday.

A 300mm factory can produce twice as many chips as an earlier generation 200mm fab.

"In addition to the increase in output, it will also help ProMOS gain an upper hand in the competitive DRAM [dynamic random access memory] industry," Chen said.

The Taiwanese chipmaker started to pump out the first wafers at the US$2 billion plant on advanced 90-nanometer technology in June, the company said.

ProMOS aims to triple its monthly output to 15,000 wafers in the first quarter of next year from the current 5,000 wafers per month.

The company hopes to boost capacity to 40,000 wafers per month in 2007 by using the more advanced 70 nanometer technology, Chen said.

To hit that target, ProMOS plans to raise US$500 million by selling equities late next year, or in the beginning of 2007, Chen said.

The chipmaker raised NT$13 billion (US$387.94 million) through a syndicated loan and US$200 million from a convertible bond issue this year to fund the new plant.

In exchange for technological support from Hynix Semiconductor, ProMOS is supplying the South Korean firm with less than half of the new plant's production, according to company spokesman Ben Tseng (曾邦助).

Tseng said that his company will continue to expand capacity by building a new 300mm facility in the middle of next year in Taichung.

With the new capacity expansion projects, the company said capital spending for next year would increase 6 percent to US$700 million from US$659 million this year.

ProMOS also operates a 300mm plant and a 200mm plant in Hsinchu.

"The deployment of 300mm fabs certainly will enhance ProMOS's competitiveness in the long run," said David Lin (林振偉), an analyst with Grand Cathay Securities Co (大華證券).

But, ProMOS won't benefit from those cost-saving facilities anytime soon, as mounting inventories are expected to drive down chip prices by another 25 percent in the first quarter of next year, Lin said.

The spot price for the benchmark 256-megabit, 400-megahertz double-data-rate DRAM chip fell 1.5 percent to US$2.22 per unit yesterday. The chips plunged 40 percent year-on-year in the third quarter, according to the Taipei-based online clearinghouse DRAMeXchange.