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  • Two Top Taiwan Foundries to Expand Capacities Overseas
  • October 1, 1998 (HSINCHU, Taiwan) -- Two of Taiwan's leading foundry fabs announced plans to expand capacities overseas.
    This indicates a positive long-term outlook amid business downturn in the semiconductor industry, and possibly unfavorable conditions at a new science park in Southern Taiwan where both firms have new fabs planned.

    Taiwan Semiconductor Manufacturing Co. (TSMC) and United Microelectronics Corp. (UMC) both disclosed on Sept. 29 deals of additional production capacities overseas.

    TSMC, the leading foundry house in the world, is to team up with Royal Philips Electronics of the Netherlands, and EDB Investment (EDBI) -- the investment arm of the Economic Development Board Investments of Singapore government -- to form a joint venture with a total investment of US$1.2 billion for a new wafer fabrication facility in Singapore's Pasir Ris Wafer Park.

    This will be the eleventh semiconductor wafer fab in Singapore.

    UMC Group, the world's second-largest dedicated foundry, is to take over the management and operation of Nippon Steel Semiconductor Corp. (NPNX) based in Tateyama, Chiba Prefecture, Japan by acquiring 56 percent of the shares by Dec. 15, 1998. This is the first overseas merger carried out by a Taiwan-based foundry fab.

    UMC's infusion of 0.25-micron technology, as well as management know-how, is targeted at transforming NPNX -- one of the two semiconductor subsidiaries of the Nippon Steel Corp. of Tokyo -- from a DRAM manufacturer into a foundry fab. In view of the growing fabless design industry in Japan, the UMC/NPNX collaboration is positioned to capture an early lead in Japan's foundry market.

    UMC has similar fab-operation takeover deals under negotiation, one in Europe and two in the United States. It is rumored that Rockwell International Corp. of the United States is one of them. UMC declined to confirm or deny the rumor.

    Construction of the new Philips/TSMC/EDBI facility in Singapore is to start in early 1999, with pilot production slated for the second half of 2000, a time when all three partners anticipate logic IC chips will be in strong demand. The new fab is to reach full monthly capacity of 30,000 wafers in 2003 with 0.25-micron, 0.18-micron technology and denser technology.

    For the Singapore project, Philips and TSMC will each hold 48 percent and 32 percent of the shares, and they will be able to call on 60 percent and 40 percent of the production capacity. Morris Chang, TSMC chairman, said the project is an extension of the company's strategy to be close to its clients.

    Philips, the leading semiconductor supplier in Europe, and TSMC have had a partnership since 1987. Philips was one of the major founding shareholders of TSMC, and still holds 27.6 percent of TSMC shares. Philips focuses on systems-on-silicon for consumer and communication applications, a relatively solid sector even today, when the market for commodity products is suffering from over-capacity.

    TSMC currently has five fabs in Hsinchu, Taiwan, and one in Camas, Wash., plus a new facility under construction in Tainan Science-based Industrial Park in Southern Taiwan.

    Toward the end of last year, both TSMC and UMC announced billion-dollar foundry fab projects in Tainan Park. Now both companies are engaged in capacity expansion overseas. UMC's suspension of all construction in the Tainan project is causing some industry analysts to speculate that Tainan Park is falling out of favor due to flood hazards and poor infrastructure.

    (Charlene Huang, Asia BizTech Correspondent)

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    Updated: Wed Sep 30 16:40:21 1998 PDT