Mosel Vitelic Inc (茂矽電子), Taiwan's third-largest memory chipmaker by market value, said it will form a chip design company with ON Semiconductor Corp, to offset losses from its main business.
Mosel plans to invest US$85 million in the venture, said Susan Lin, Mosel's finance manager. ON Semiconductor, spun off from Motorola Inc's Semiconductor Components Group, will provide testing equipment and its distribution network, Lin said.
"We're always looking for design houses to invest in, develop their product, then have them place production orders with us," Lin said.
Mosel wants to expand beyond making memory chips, which sell for less than their production cost. Falling chip prices forced Mosel to cancel plans to build a new plant and to sell shares in subsidiary ProMos Technologies Inc to raise cash after it posted a NT$8.9 billion loss in the first half.
In December, Mosel and Sharp Corp, Japan's largest flat panel display maker, set up a venture to make chips used in flat panel displays.
While Mosel will hold a 40 percent stake in the new design company, ON Semiconductor will hold 51 percent. Advanced Analog Technology Inc, a Mosel unit that designs chips, will hold a 9 percent stake.
Mosel, which says it has NT$14.5 billion in cash, will pay for its stake in cash and through loans and production capacity from its chipmaking plant, Lin said.
It plans to sell shares in the new company on the NASDAQ Stock Market in 2003, Lin said.
The venture was earlier reported in a Chinese language newspaper.
The company will be called OnMOS, the paper said.
Mosel shares fell as much as NT$0.30, or 4.7 percent, to NT$6.05 in earlier trading. The shares have fallen 62 percent so far this year, compared with a 26 percent fall in the main TWSE Index.
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