Advanced Micro Devices and UMC late Thursday announced they will form a joint venture to build and operate a 300mm wafer fab in Singapore to make PC processors and other logic products.
UMC will also become a foundry to make AMD processors to augment output from the chip firm's own fab in Dresden, Germany.
The joint venture, called AU Pte Ltd., will start production in 2005 at the 0.065-micron processing node.
"Today's agreement reflects an innovative response to the tectonic shift that has changed the fundamental economics of the worldwide semiconductor industry," said W. Jerry Sanders III, AMD chairman.
"This is the first agreement under which a premier foundry company joins forces in a broadly unified partnership with a leading integrated device manufacturer (IDM)," said Robert Tsao, chairman of chief executive of UMC.
In a teleconference, Sanders said when the new 300mm fab comes on line it will allow AMD to far exceed the 50 million processor annual production of its Fab 30 in Dresden, Germany.
Sanders said the partners are planning about 10,000 wafers of 300mm size a week.
"I leave it to your imagination on how many more processors we can produce in the new joint venture fab," he said. The industry consensus is that a 300mm fab doubles the number of comparable die made in a 200mm fab.
The Dresden facility reaches is expected to reach its capacity by 2004, a year before the 300mm fab is planned to enter production.
He said UMC will start later this year to make processors for AMD using an 0.13-micron process.
The AMD chairman said he believed that nothing in the joint venture is in conflict with the firm's licensing agreement with Intel.
He conceded that Intel has more resources build capacity, but that the joint venture with UMC "is a jujitsu" tactic to get enough capacity to continue building market share against its archrival.
Hector Ruiz, AMD president, said that AMD will get an early advantage in 300mm experience by working with UMC for pilot production in one of the Taiwan firm's three existing or under construction 300mm fabs.
The two firms will cooperate on process development of interim 0.09-micron processing technology, that would be used as part of the foundry output until the 300mm fab is built. The two will also jointly develop the 0.065-micron process that will be used in the Singapore 300mm fab.
The announcement kills any prospect that AMD might expand its Dresden site for the 300mm fab the firm said it was planning.
Both said it was too early to tell if the next generation lithography tool of Extreme Ultraviolet (EUV) will initially be used at the new joint fab. Ruiz said eventually it was likely EUV would move into the Singapore fab.
Ruiz said the new joint venture doesn't change AMD's cooperative R&D relationship with Motorola, but the firm's 0.01-micron joint development agreement with IBM Corp. "may have to be modified."
Sanders said the Singapore incentives for the new fab "were better than offered either by China or Taiwan."
He indicated that AMD's next-generation Hammer series processors wouldn't be produced by UMC. He told analysts that AMD plans to have all the Hammer processors built in the Fab 30 Dresden fab.
Sanders said AMD will make an as yet-undisclosed level of investment in the new joint venture, using some of the convertible bond issue completed two weeks ago. He said the firm will take on some additional debt several years from now, as the fab starts to be equipped, but no debt for the joint venture will be incurred this year.
He said the joint venture or foundry agreement doesn't include making flash memory.