Powerchip Semiconductor Manufacturing Corp (力積電) yesterday said it had terminated a deal with SBI Holdings Inc to help build a chip manufacturing plant in Japan, as Powerchip found it unpractical to take the full responsibility of operating a plant it does not own for more than 10 years.
Powerchip, Taiwan’s third-largest contract chipmaker, inked a non-binding memorandum of understanding (MOU) with SBI in July last year to explore the possibility of building a 12-inch chip fab in Japan.
According to the MOU, Powerchip’s role was that of a technology provider, as the company hopes to generate a new revenue stream, chairman Frank Huang (黃崇仁) said.
Photo: Grace Hung, Taipei Times
The fab would belong to JSMC Holdings Inc, which is owned by SBI, and Powerchip would have no stake in it, Huang said.
His company was requested to apply for Japanese government subsidies of about ￥140 billion (US$929.1 million) to fund the construction, as SBI, a financial service provider, was not eligible to apply for such subsidies.
Nonetheless, “Powerchip has to withdraw from the project, because it cannot promise that it would take the responsibility of running the fab for 10 years, which is requested by the Japanese government,” Huang said.
Huang denied SBI Holdings chairman Yoshitaka Kitao’s accusation that Powerchip was dishonest and did not commit to creating a semiconductor venture in Japan.
There are also fears the fab would lack competitiveness, given its expensive manufacturing costs and relatively small scale in capacity, he said.
The company would focus on India instead, where it has agreed to provide its technologies to Indian partner Tata Electronics Pvt Ltd to help the company build an advanced chip fab, Huang said.
Tata Electronics would apply for Indian government subsidies, he said.
Powerchip expects to gain NT$20 billion (US$623.9 million) from the partnership with Tata Electronics over four years, he said.
Powerchip last quarter reported its fifth unprofitable quarter in a row, with losses ballooning to NT2.28 billion, following losses of NT$1.96 billion in the second quarter.
The company said the losses stemmed from heavy depreciation caused by a new factory in Miaoli County’s Tongluo Science Park (銅鑼科學園區) as well as growing competition from Chinese competitors.
Powerchip said it expects sluggish demand for display driver ICs and mounting price pressure this quarter.
Demand for power management chips also looks flat this quarter compared with last quarter, it said.
DRAM chip prices are expected to go down amid a global supply glut, it said.
Meanwhile, the company plans to invest NT$2 billion initially on 3D artificial intelligence chips and expects to ramp up production by the end of next year, it said.
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