In a complex arrangement that could boost Taiwan's reeling DRAM industry, Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC) will reduce its stake in one local DRAM maker and invest in another.
Under the terms of the agreement, TSMC will sell nearly 20 million shares, or less than 1% of its holdings, in Hsinchu-based DRAM maker Vanguard International Semiconductor Corp. (VISC) to another local DRAM supplier, Etron Technology Inc.
The IC-wafer foundry giant, which held a 26.7% stake in VISC before the transaction, will then purchase for an undisclosed amount a 5% stake in Hsinchu-based Etron, a fabless IC design house that makes high-density DRAMs.
The deal will enable VISC and Etron to combine resources in product development. As part of the deal, VISC and Etron will co-develop 64-Mbit and higher-density DRAM products, as well as accelerate their process technologies to 0.18-micron, according to Robert Hsieh, VISC's vice president of finance.
VISC and Etron are no strangers. In fact, VISC president C.Y. Lu and Etron president Nicky Lu are brothers.
Before 1994, VISC was actually a government-sponsored research lab that developed and licensed submicron chip technology to local IC makers. At that time, Etron provided DRAM and SRAM designs to the lab.
In 1994, the Taiwanese government spun off the lab into a new and independent merchant DRAM company called VISC, which also owned the island's first 8-in.-wafer fab.
Meanwhile, Taiwan's DRAM industry has taken a major hit in the last year or so following a downturn in the worldwide memory market, and every Taiwan DRAM company is bleeding red ink to one degree or another.
Even TSMC, which has been racking up record profits and sales, has taken a minor hit due to its exposure in VISC.
But Y.C. Huang, vice president of TSMC, denied the company unloaded a small portion of VISC's stock to reduce its exposure in that company. "This is a business strategy to reinforce VISC's relationship with Etron," he said.