Officials from memory chipmaker Nanya Technology Corp (南亞科技) yesterday confirmed that they were in talks with US-based computer giant International Business Machines (IBM) concerning a license for chip manufacturing technology.
Early next year, a team of Nanya Technology engineers will begin working with technicians at an IBM lab in Burlington, Vermont, on developing specialized manufacturing technology that will allow Nanya to carve chips at 0.14 microns -- over 100 times smaller than a strand of human hair.
Nanya's discussions with IBM are focused on 0.11, 0.09 and 0.07 micron technology, which should take care of Nanya's technology needs through 2004, analysts said.
Such agreements are a positive note in what the Semiconductor Industry Association called the worst year ever in the sector.
The slump has been particularly difficult for Taiwanese memory chipmakers. The price of industry standard 128 megabit DRAM memory chips has been below the cost of production for some time.
Since then, the nation's six DRAM makers have racked up losses totaling US$1.23 billion, including Mosel Vitelic Inc's (茂矽電子) US$434.8 million, Nanya's US$217.4 million, Winbond Electronics Corp's (華邦電子) US$188.4 million, Vanguard International Semiconductor Corp's (世界先進) US$142 million, Powerchip Semiconductor Corp's (力晶半導體) US$139.1 million, and ProMos Technologies Inc's (茂德科技) US$110.1 million.
With the holiday season lifting personal computer sales, Nanya's revenues surged. The firm reported a near 70 percent leap in month-on-month revenue in November.
As sales surged, so did Nanya's stock price. Its shares rose nearly 42 percent in December, from NT$17.3 per share to NT$29.7 yesterday.
Nanya officials credit the surge to its technology partnership with IBM and a decision to develop a special kind of memory chip used in PCs called DDR (double data rate) memory.
IBM is one of only two multinational chip companies ranked among the top 30 in terms of revenue that will actually expand production this year. Sales in the chip industry are forecast to decline by over 33 percent to US$152 billion from a record high US$227 billion last year, according to the market research firm Dataquest.
IBM Microelectronics, the chip division of IBM, will grow by 3.9 percent. By contrast, analysts believe revenue at Intel Corp, the largest chipmaker, will drop by over 22 percent.
The second key decision this year for Nanya was to begin working with DDR memory, which was untested in the market. An industry group was backing DDR memory chips for use with high performance desktop computers with CPUs running at 1 gigahertz or higher.
It also said DDR could replace a more expensive memory designed by Rambus Inc.
Nanya holds an 18 percent share of the world market for DDR memory and the company says it will shift all production to the chips next year.
As the chips gain popularity, Nanya expects its entire capacity to account for only 10 percent of world demand. The company is already shipping the latest version of DDR memory chips, called DDR 333, and is working on the next generation of DDR memory, DDR 400, with IBM.
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