Powerchip investing in chip testing, may sell Macronix

By Lisa Wang  /  STAFF REPORTER

Fri, Jun 22, 2007 - Page 12

Powerchip Semiconductor Corp (力晶半導體), the nation's biggest computer memory chipmaker, yesterday said it planned to invest NT$2.5 billion (US$75.9 million) to set up a chip testing facility to boost operational efficiency.

The new testing facility is scheduled to start operation in the second quarter of next year, with maximum capacity of 400,000 12-inch wafers a month, company spokesman Eric Tan (譚仲民) said in a telephone interview.

"By separating wafer testing from manufacturing facilities, we will be able to make room for production and boost capacity using existing equipment and facilities," Tan said, without detailing the output increase.

Powerchip currently conducts wafer testing mainly at its chip factories, Tan said.

The company plans to increase monthly output slightly to 128,000 12-inch wafers and 37,000 8-inch wafers by the end of this quarter to gain market share.

That is despite an ongoing supply glut, which is expected to drive the price of benchmark DDR2 512Mb down nearly 50 percent year-on-year to US$2.99 per unit by the end of this quarter, market researcher Gartner Inc said in its latest forecast.

Part of the planned wafer testing complex will be used as the company's research and development center, with a staff of about 500 engineers, Powerchip said in a statement released yesterday.

For the full year, the DRAM maker aims to expand wafer shipments by 82 percent. It also plans to spend NT$69 billion on new facilities and equipment this

year, down from NT$85 billion last year.

Early this month, Powerchip posted NT$40.34 billion in revenues during the first five months of the year, up 48.6 percent from NT$27.14 billion a year ago.

Separately, Powerchip said it was mulling selling its stake in local memory chipmaker Macronix International Co (旺宏電子), acknowledging likely defeat in a proxy war.

Encouraged by the growing demand for flash memory, Powerchip had bought shares of Macronix, with the aim of nominating eight representatives to the 15-member board of Macronix during the election next Friday.

But a canvas of shareholder's proxy votes did not go as smoothly as it had expected, Powerchip said on Wednesday. Powerchip holds 5.34 percent of Macronix.

"We'll considering selling our holding since [the existing management team of] Macronix is not interested in deepening the partnership," Tan said.

He said Powerchip would consider offloading Macronix shares at a more "profitable" time, adding that "no timetable has been set yet."

The investment should be profitable now as Powerchip bought Macronix shares at a cost of NT$8.08 to NT$10.16 per share, compared with its closing price of NT$13.9 yesterday.