Powerchip plans massive DRAM expansion

Powerchip plans massive DRAM expansion

Powerchip Semiconductor plans to build four new 300mm chip factories in Taiwan over the next six years to become one of the world's leading DRAM suppliers.

Taiwanese memory chip maker Powerchip Semiconductor plans to build four massive new factories in Taiwan over the next six years to become one of the world's leading DRAM (dynamic RAM) suppliers.

The chip factories, dubbed 300-millimeter (12-inch) plants for the size of the silicon wafers used in production, normally cost between US$2.2 billion to US$3 billion each depending on the number of manufacturing lines and technology inside.

The company is betting more and more consumer electronics products will use DRAM, such as game machines and 3G (third generation) mobile phones, and that, since many of its rivals are chasing the NAND Flash memory market, there will be more opportunities for DRAM makers in the future.

"We plan to build two new factories every three years for the next six years to meet demand," said Eric Tang, a vice president at Powerchip, in an interview with IDG News Service. The company projects its capital spending will reach NT$50 billion (US$1.88 billion) this year, and up to NT$30 billion next year.

Powerchip already has two of the huge plants operating in Taiwan. It built the first one just in time to catch a market upturn in 2003, and its second plant is already turning out around 25,000 wafers per month. Thousands of DRAM chips can be made on a single wafer.

Despite the lofty price tags on the new plants, they are important in driving down the cost of mass-produced chips. Companies estimate the factories slash the cost of chip production by about a third compared to older, 200-mm (8-inch) factories.

Powerchip has already started seeking land for its third factory, but it doesn't have a precise timeline for construction.

Earlier this week, one of Powerchip's main rivals in Taiwan, Inotera Memories, broke ground on its second 300-millimeter semiconductor factory, and expects to complete the project by the end of next year.

The global leader in DRAM production is South Korea's Samsung Electronics. The company has devoted ever more time and resources this year to producing NAND Flash memory chips, which are used in gadgets like MP3 players and digital cameras, because they're more profitable.

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