More Taiwanese Chip Makers Slash Spending
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Three more manufacturers are cutting costs in anticipation of lower production this year.
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(InfoWorld) - Four Taiwanese chip assembly companies have won preliminaryÂ government approval for investments in China, including aÂ joint venture with Europe's NXP Semiconductors. The companies must still await final approval by the Taiwan Investment Commission before moving forward, an economics ministry official said Tuesday. Government agencies involved in China-bound investment decisions have already voiced agreement to allow the four companies to invest in low-end chip assembly operations in China. Final approval is expected within the next few months. Taiwan carefully regulates technology investments to China over fears the Chinese military could use the technology against the island, in addition to nervousness about job losses and losing its competitive edge. Taiwan and China remain enemies after splitting in 1949 amid civil war. Taiwan has developed a vibrant economy and a democratic government in the time since the separation, while China's economic development started more recently. Despite their strained relationship, China remains the favored destination for Taiwanese investment due to their shared language and culture, as well as China's lower costs and incentives for building factories. Among the four investments, Taiwanese officials have given a nod to a deal between NXP Semiconductors, the former chip division of Koninklijke Philips Electronics, and Advanced Semiconductor Engineering (ASE), the world's largest independent chip packaging and testing company. Earlier this year, the two companies signed a memorandum of understanding to form a joint venture in Suzhou, China. ASE will take a 60 percent stake in the venture, while NXP will hold the remaining 40 percent. The other three Taiwanese companies winning preliminary approval are Siliconware Precision Industries Co Ltd., Greatek Electronics Inc., and Walton Advanced Engineering Inc. As part of their China applications, the four companies all included plans to continue investing in Taiwan, the official said. In all, they promised to invest NT$75 billion (US$2.29 billion) in Taiwan over the next three years, including NT$40 billion from ASE, NT$20 billion from Siliconware, NT$10 billion from Greatek and NT$5 billion from Walton. ASE and Siliconware executives could not immediately be reached for comment, while Greatek and Walton both declined to immediately comment.
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National Semiconductor Corp.  on Thursday said it would cut about 6 percent of its work force to reduce costs amid a chip supply glut and it will book severance charges of between &#36;22 million and &#36;26 million for the move.
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The market for semiconductor  equipment is expected to contract by almost 10 percent in 2008  largely due to lower spending from makers of computer memory,  market research firm Gartner said in a statement on Thursday.
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Sony Corp.  will cut back on future chip spending and may not produce advanced chips used in its PlayStation 3 (PS3) in-house, a senior executive said on Tuesday, in a move aimed at driving the semiconductor unit's nascent earnings recovery.
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German DRAM (dynamic RAM) maker Qimonda put the construction of an advanced semiconductor factory in Singapore on hold and slashed its planned capital spending for 2008 after reporting a steep first-quarter loss.The company blamed a 40 percent&#160;drop in DRAM prices&#160;for a &#8364;598 million ($866.3 million) net loss in its fiscal first quarter, which ended Dec. 31. Qimonda&#39;s sales reached just &#8364;513 million during the period, down 56 percent from the &#8364;1.17 billion in sales it reported one year earlier.A massive 73 percent drop in DRAM prices over the course of last year has memory chip makers scurrying to realign their business strategies. On Tuesday, Qimonda&#39;s joint venture partner, Nanya Technology, and their joint venture,&#160;Inotera Memories, both posted losses and announced&#160;lower spending&#160;on new production lines for 2008.Qimonda had much the same to say. The company cut its proposed capital spending for fiscal 2008 by &#8364;250 million down to a range of &#8364;400 million to &#8364;500 million. Due to the reduction, the construction of a new 300-millimeter (12-inch) memory chip plant in Singapore has been put on hold, Qimonda said in a statement.The DRAM market took a turn south last year as companies built too many new factories and demand for new PCs armed with Windows Vista failed to meet expectations. The resulting glut sent DRAM chip prices tumbling.The contract price of 1Gb DDR2 (double data rate, second generation) DRAM chips that run at 667MHz fell to $1.81 each as of Jan. 21, according to DRAMeXchange Technology, which operates a clearinghouse for the chips. The chips were $3 each at the start of October, when the current price slump hit.Qimonda noted the 40 percent decline in the October to December period was one of the strongest declines ever, and that even previously announced measures to cope with the price slide could not compensate for the difficult market environment.The company also said it is already reassessing its outsourcing strategy. Qimonda has worked with several partners in Asia to contract manufacture its chips and in technology transfer schemes aimed at sharing the cost of research and development. These partners include Semiconductor Manufacturing International (SMIC) of China, as well as Nanya Technology and Winbond Electronics of Taiwan.&#160;
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(InfoWorld) - In the most significant easing of investment regulations for Taiwan's technology industry to date, the island's government will allow two chip makers to build factories in China and one more to invest in a Chinese rival, a high level official said Tuesday. Memory chip makers Powerchip Semiconductor and ProMOS Technologies will both be allowed to build chip factories in China, while Advanced Semiconductor EngineeringÂ (ASE) will receive approvalÂ for a plan toÂ buy a low-end chip assembly companyÂ based in Shanghai. ASE is the world's largest chip assembly company. "An official announcement will be made on Wednesday," said Joseph Wu, chairman of the Mainland Affairs Council, Taiwan's official governing body for China relations. A group of government agencies agreed to the easing Monday during a committee meeting. The final step in making the decision formal is for the Taiwan Investment Commission, which is in charge of vetting China-bound investment applications, to give its stamp of approval and publicly announce the new measures. The easing is seen as a major breakthrough for Taiwan and China. For China, it could reinvigorate a chip industry that has slowed over the past few years as major chip makers such as Semiconductor Manufacturing International Corp. (SMIC) posted a string of money-losing quarters. It also represents a token of goodwill by Taiwan to political enemy China. Taiwan and China remain enemies after splitting in 1949 amid civil war. The island fears China could use chip technology to bolster its military capabilities against Taiwan. Despite the strained relationship and tough investment rules, China remains by far the favored destination for Taiwanese investment due to their shared language and culture, and China's lower costs and huge potential market. The formal announcement expected Wednesday will likely fall short of hopes held by Taiwanese chip makers. Companies have been lobbying the government for years to allow them to transfer 0.18 micron chip production technology to China, but such an opening will have to wait, Wu said. Taiwan Semiconductor Manufacturing Co. (TSMC) has made a strong push on the 0.18 micron issue, in part because Chinese rivals such as SMIC are already using the technology, and are able to win over customers because of it. Taiwanese regulations currently only allow its chip makers to use 0.25 micron technology in China. ASE's board of directors approved a plan to last month to invest $60 million in Global Advanced Packaging Technology, a Shanghai company.
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Analysts lower revenue projections for contract chip makers to 5.1 percent.
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Fujitsu announced plans to move its chip operations into a new unit, sparking a drop in stock prices.
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Advanced Micro Devices' move to cut overhead costs by outsourcing its chip manufacturing business may backfire in the long run, according to several analysts who have downgraded the company's stock.
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(InfoWorld) - Taiwan's largest DRAM maker, Powerchip Semiconductor, on Monday denied a local media report that it planned to build a chip factory in China with a Japanese partner. The Chinese-language Commercial Times newspaper said Powerchip had invited Japan's Renesas Technology to jointly invest in a chip factory in China. Renesas and Powerchip currently work together in technology and chip production outsourcing pacts. Powerchip said it isn't making any China plans right now because it's too busy. "This is just a rumor, nothing has been done yet," said Eric Tang, a vice president at Powerchip. Powerchip has alreadyÂ gained approval from the Taiwan governmentÂ to invest in China, but one of the rules requires it to move used equipment from an old factory in Taiwan to its new China plant, instead of buying new machinery. The trouble is that orders at Powerchip are too brisk to consider such a move, Tang said. The company's older chip plant, called an 8-inch plant due to the size of the silicon wafers used to make chips on, is still making money in Taiwan so there's no need to move it to China right now, he said. Powerchip may buy used equipment from elsewhere and move it to China instead of using gear from its own 8-inch plant, he said. The company has no plans to move forward on the project in the near term. Taiwan and China remain enemies after splitting in 1949 amid civil war, the reason Taipei carefully regulates high tech investments to the mainland. Despite their strained relationship, China remains the favored destination for Taiwanese investment due to their shared language and culture, as well as China's lower costs and incentives for building factories.
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A&#160;sharp decline in DRAM prices&#160;has caused some Taiwanese DRAM makers to cut back on their capital spending plans this year in a bid to shore up the market.&quot;Right now, there is a huge supply in the market,&quot; said Charles Kau, president of Inotera, during a news conference in Kuei Shan, Taiwan.Prices have dropped so much that its hard for DRAM companies to make money. On Tuesday, Inotera Memories reported an NT$3.7 billion (US$114.3 million) loss for the fourth quarter of 2007. Nanya Technology reported an even larger loss, of NT$8.2 billion, for the same time period.To combat falling prices, Inotera slashed its 2007 spending and will spend far less on new factories and production lines this year. The company spent NT$44 billion last year to install production lines at a new factory in Taiwan. But the spending figure ended up less than the NT$51.4 billion it had proposed to spend earlier in the year. For 2008, Inotera&#39;s spending will drop even more, to NT$30 billion, as it refits production lines with newer technology that makes chips smaller and more powerful.Nanya Technology reduced its 2007 capital spending to NT$47 billion from a projected NT$60 billion. The company started building a new state-of-the-art factory last year, a plant that will increase production throughout this year. In 2008, Nanya plans to spend NT$40 billion.&quot;This year, capital spending discipline is very important,&quot; said Kau. Spending less can help companies shore up their finances. DRAM factories are expensive, costing around US$2.2 billion or more each, depending on the size and projected output. Companies in the industry depend on strong cash flow as well as loans to pay for the factories.A glut has sent DRAM chip prices tumbling. The contract price of 1Gb DDR2 chips that run at 667MHz fell to US$1.81 each as of Jan. 21, according to DRAMeXchange Technology, which operates a clearinghouse for the chips. Prices of the chips were at $3 at the start of October, when the current price slump hit.Executives at Inotera and Nanya Technology&#160;forecast a rebound in prices&#160;in the second half of this year, as PC demand rebounds.&quot;Currently, we&#39;re optimistic about the second half because our customers are optimistic about the second half,&quot; said Pai Pei-lin, a vice president at Nanya Technology. He said he hopes the new service pack for Microsoft&#39;s Vista OS, which is due out shortly, will further spur PC buying and help the DRAM industry rebound. More DRAM chips go into PCs than any other product.
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Intel will invest $65 million in Taiwanese chip assembler that specializes in flash memory and DRAM.
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(InfoWorld) - The investment arm of chip maker Intel said Thursday it agreed to invest $65 million in Powertech Technology, a Taiwanese chip assembler that specializes in flash memory and DRAM (dynamic RAM). Intel Capital said the funds, along with capital from other investors Powertech expects to bring on board, will be used as working capital to support the continued growth of its operations. Intel is an active customer of Powertech, it said in a statement, and led the round of financing for Powertech. The announcement came as no surprise in Taiwan, where Chinese-language media had been reporting such a deal between Intel and Powertech was in the works. The investment is one indication of how competitive the NAND flash memory chip business has become, and the importance of Powertech's services. Intel entered the NAND flash memory fray byÂ partnering with Micron Technology, a deal the two companies announced in late 2005, and started early last year under the name IM Flash Technologies. They entered an already competitive industry that included South Korean heavyweights Samsung ElectronicsÂ and Hynix Semiconductor, as well as NAND flash developer SanDisk. NAND flash chips have become popular thanks to widespread use for song storage in digital music players, including Apple's iPod Shuffle and iPod nano. One bottleneck in NAND flash production is in chip assembly, where companies seal the chips inside protective coverings, the final step in the making of a chip. Powertech specializes in memory chip assembly, including NAND flash memory as well as DDR2 (double data rate, second generation) DRAM chips. The NAND business has hit a few speed bumps recently. The popularity of the chips caused companies to build too many new NAND production lines, causing a glut of chips on the market and sending prices tumbling. SanDisk announced a few weeks ago that it planned to lay off 10 percent of its work force in a bid to remain profitable despite steep price cuts on its chips. The Milpitas, California company said NAND flash memory chip prices have dropped 50 percent in the last two months.
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Intel, the world's leading computer chip maker, slashes its revenue forecasts, triggering a decline in global chip stocks.
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(InfoWorld) - In a sign ofÂ China's growing importanceÂ as a center of semiconductor manufacturing, Chinese chip makers will spend more than ever before on cutting-edge factories over the next two years. Chinese spending on chip plants will top $9.8 billion between 2006 and 2008, with most of these funds going towards the construction of factories that produce chips on 300-millimeter wafers, industry group SEMI said. If realized, this spending forecast will top combined Chinese spending on chip plants over the last five years, which amounted to $8.7 billion, it said. Around 70 percent of the money that will be spent on new Chinese plants will go towards factories that use 300-millimeter wafers, which will result in an annual increase in production capacity of 16 percent by 2008, SEMI said. At least five new 300-millimeter plants are expected to come online by 2008, it said. While the fast growth of China's market presents opportunities for established chip makers as well as new entrants, established players -- especially those with Chinese government backing and overseas funding -- will fare better over the long term, SEMI said. Leading China's charge forward in chip production is Semiconductor Manufacturing International Corp., the country's largest chip maker. Among a string of production plants across China, SMIC has one 300-millimeter plant in production and another two under construction in Beijing. The company has also signed an agreement to manage the operations of other plants, including a 300-millimeter fab to be constructed in Wuhan. That agreement helpedÂ spark a lawsuitÂ by rival Taiwan Semiconductor Manufacturing Corp., which said the deal violated the terms of a 2005 settlement agreement that ended a patent infringement lawsuit brought against SMIC by TSMC. The latest lawsuit is currently pending in a California state court.
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Server maker drops UltraSparc IIIi+ processor to focus on other, higher-priority chips.