Tue, Jan 17, 2006 - Page 10 News List

ProMOS to spend US$10 billion on four new plants

RAMPING UP The memory chipmaker's ambitious plan comes after surprising news of insufficient supply, following several quarters of glut that reduced prices

By Lisa Wang  /  STAFF REPORTER

ProMOS Technologies Inc (茂德科技), the nation's third-largest maker of computer memory chips, plans to spend about US$10 billion to build four new advanced chip factories to meet growing demand, a company executive said yesterday.

ProMOS' capacity expansion comes amid looming supply constraints for the second-generation double-data-rate (DDR-2) memory chips, after a glut lasting several quarters. An oversupply of memory chips last year sent prices plunging 43 percent from 2004.

"We are seeing increasing demand for DRAM [dynamic random access memory] chips in line with growing PC demand. We have to be ready [for the future demand]," ProMOS spokesman Ben Tseng (曾邦助) said.

Tseng said the DRAM industry was highly volatile.

"Nobody could have foreseen the DDR-2 shortage three months ago," he said.

Tseng said that ProMOS, which now operates two 12-inch facilities in Taiwan, is scheduled to build a third one some time in the first half of this year.

ProMOS also plans to build two more advanced plants as early as 2008 in central Taiwan as well as upgrading an 8-inch plant to a 12-inch plant, Tseng said.

A 12-inch plant which can make 40,000 units of cutting-edge chips with a circuitry width of 70 nanometers will cost the DRAM supplier around US$2.3 billion, according to Tseng.

Such advanced factories can yield more than twice as many chips as a less-advanced 8-inch plant, helping chipmakers lower production costs and offer more competitively-priced products.

ProMOS plans to increase spending on new equipment to more than US$700 million this year, up from US$659 million last year.

ProMOS is supplying memory chips to the word's No. 2 DRAM supplier Hynix Semiconductor Inc in exchange for the transfer of advanced technologies.

ProMOS is not the only Taiwanese company aggressively boosting capacity. Larger rivals Powerchip Semiconductor Corp (力晶半導體) and Nanya Technology Corp (南亞科技) also have expansion plans in place.

The three Taiwanese firms supply about 15 percent of the world's DRAM demand, according to market research iSuppli Corp.

Powerchip said early this month that it plans to build a third 12-inch facility and ramp up production in the middle of next year.

Powerchip plans to make next-generation DRAM chips and high-density data flash chips.

Nanya Technology is planning to build its first 12-inch factory this year, in addition to its 12-inch plant owned by the firm in a joint venture with Infineon Technologies AG and Inotera Memories Inc (華亞科技).

Inotera, which is set to list on the nation's major stock market, is scheduled to complete a second 12-inch plant in Taiwan by the end of this year.

The spot price for the benchmark 256-megabit, 400-megahertz double-data-rate (DDR) DRAM chip held stable at US$2.34 per unit yesterday, according to the Taipei-based online clearing house DRAMeXchange.

The price for 512Mb DDR-2 DRAM chip rose 1.76 percent to an average US$4.62 per unit, according to DRAMeXchange.

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