Expanding its growing manufacturing empire, United Microelectronics Corp. today said it will enter the Japanese wafer foundry market by acquiring a majority share of Nippon Steel Semiconductor Corp.
The deal will garner UMC a 56% stake in the company, which is a subsidiary of Nippon Steel Corp. (NSC). The equity stake includes an 8-in. wafer fab which UMC will refit to run its 0.25-micron process technology. Pending takeover procedures under Japan's Securities and Exchange Law, the transfer should be completed by Dec. 15, after which UMC said it will rename the company, which is based in Tateyama City, Chiba prefecture.
The value of the deal was not disclosed. Nippon Steel Semiconductor has a market capitalization of about $50 million, according to company records.
The chip maker, which has 930 employees and posted 1997 revenue of nearly $132 million, had been operating as a DRAM manufacturing subsidiary of Tokyo-based NSC. The company late last year said it would shift from its role as a DRAM merchant supplier to that of a foundry services provider in order to capitalize on Japan's growing fabless design industry.
However, given the poor state of the global semiconductor market, NSC decided that a merger with UMC would better accomplish that goal, according to NSC executives. Hsinchu, Taiwan-based UMC, for its part, said the move will help it enter a lucrative new market.
"The main purpose [of acquiring Nippon Steel Semiconductor] is to
gain market in Japan," said Sandy Yen, senior manager of the marketing
promotion department for UMC's sales division. "We will turn the fabs to
foundry and install the 8-in. fab with new equipment and fine-tune [the lines] with UMC's process technology."
In addition to the 8-in. wafer fab, Nippon Steel Semiconductor has a 6-in. wafer production facility, which will be closed and sold off. Parent NSC will pay back all Nippon Steel Semiconductor's existing loans. Additionally, NSC will assign the assets of fully owned subsidiary Tateyama Semiconductor Manufacturing Co. to Nippon Steel Semiconductor and then dissolve the company.