Sat, Dec 10, 2005 - Page 10 News List

Powerchip clinches flash-memory deal with Renesas

By Lisa Wang  /  STAFF REPORTER

Powerchip Semiconductor Corp (力晶半導體) said yesterday it has clinched a deal to supply Japanese chipmaker Renesas Technology Corp with large-capacity flash memory chips.

Powerchip's remarks came after Renesas, a joint venture between electronics giants Hitachi Ltd and Mitsubishi Electric Corp, on Thursday announced that it would halt development of AND-type flash memory chips with storage capacities of 8 gigabits or more as the chip market becomes more challenging.

Renesas said it would continue to supply customers with low-capacity chips, including 1-gigabit and 4-gigabit flash memory chips, by improving its existing facilities and strengthening relationships with partners.

Powerchip, Renesas' local chip supplier, "hopes to supply the company with 4-gigabit flash memory chips beginning next year after ramping up production of such products," Powerchip spokesman Eric Tan (譚仲民) said.

Flash memory chips are used in various consumer-electronics products, including mobile phones and digital cameras.

Powerchip, the nation's biggest memory-chip manufacturer, currently makes around 5,000 chips with a storage capacity of 1 gigabit per month for Renesas, and recently initiated the pilot run for the high-capacity chips, Tan said.

Market watchers cautioned that the strengthening partnership with Renesas might not provide a long-term boon for Powerchip.

"This may be just a one-time outsourcing. We think there are still some long-term issues to watch," said Frank Wang (王安亞), who tracks the memory-chip industry for Morgan Stanley in Taipei.

Powerchip's low yield rate was one of the most important issues affecting the deal, Wang said.

He questioned whether Powerchip will be able to hit the target of making 20,000 chips a month by the end of this year as scheduled in light of its currently small output.

Powerchip shares yesterday fell 0.26 percent to NT$19.50 on the over-the-counter GRETAI Securities Market after foreign investors ended 15 consecutive trading sessions on the purchase side. The decline was smaller than that of Nanya Technology Corp (南亞科技), which dropped 0.56 percent to NT$17.85, and ProMOS Technologies Inc (茂德科技), which shed 0.9 percent to NT$9.96.

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