TAOYUAN, Taiwan -- Nanya Technology Corp. is in talks with Infineon Technologies AG regarding a potential collaboration, Nanya confirmed today.
Infineon has decided to team up with Nanya to construct two 300mm wafer fabs to produce DRAMs in Taiwan, according to the Taipei-based Economic Daily News, which did not cite its sources. Nanya said in a statement today that the companies are "in talks for a possible cooperation," but declined to release any details.
The talks come three weeks after Infineon, Munich, Germany, announced that it agreed to turn to Taiwan's Mosel Vitelic Inc. and Winbond Electronics Corp. for extra capacity. Now, Infineon is trying to partner with Nanya, possibly the island's biggest maker of double data rate (DDR) DRAM, to raise capacity.
The German memory maker's efforts to expand production comes amid rising competition, as Micron Technology Inc. has been negotiating with creditors of Hynix Semiconductor Inc. to acquire the Korean company's DRAM fabs.
If the merger goes through, Micron, Boise, Idaho, would have a 35% market share, making it the No.1 DRAM manufacturer, according to estimates from ABN AMRO in Taipei. That would pose serious threats to its closest rivals Samsung Electronics Corp. and Infineon. The German company, in particular, would face the largest challenge since it has only about 13% of the market.
"Infineon is getting more anxious than anybody else in the industry," said Helen Huang, an analyst with ABN AMRO. "It has to do something to expand market share and increase pricing power, and Taiwan is the right place to go because it's attractive as a partner."
Taiwan's major players -- Nanya, Winbond, Mosel, ProMos Technologies and Powerchip Semiconductor Corp. -- together represent about 10% of worldwide DRAM output, excluding the products made for their foreign customers like Infineon and Mitsubishi Electric, analysts said.
Since Infineon already has Winbond, Mosel and ProMos on its side, the next target could be Nanya, which licenses process technologies from IBM Corp. Infineon, Toshiba Corp. and IBM use trench technology, while Mitsubishi -- which transfers technologies to Powerchip -- uses stack technology, they said.
Taoyuan-based Nanya is planning to break ground on a 12-inch wafer fab in the second quarter with production slated in 2004. Currently, the company operates two 8-inch wafer fabs, owning a monthly capacity of 63,000 wafers combined.
The talks between Infineon and Nanya also demonstrate the DRAM industry is picking up after suffering its worst year in 2001.
Powerchip and ProMos, an Infineon-Mosel joint venture, today received syndicated bank loans of $200 million and $157.1 million, respectively, to help fund the 300mm wafer facilities they're ramping up.
President Michael Tsai of Powerchip said that the plant is boosting production to 15,000 wafers a month starting the December quarter, compared with a pilot production of 5,000 wafers around June. "Our capex would surge to $685.7 million this year," four times last year's, he said.
With spot prices of 128Mb DRAM jumping above $4 from about $1 a few months ago, Powerchip is expecting to return to profitability in the March quarter following losses in the previous three quarters, the president said.
ProMos' 300mm fab is slated to reach a monthly capacity of 9,000 wafers in the second half of this year, growing from 5,000 in the second quarter.
Earlier this month, Infineon signed a non-binding memorandum of understanding (MoU) with Winbond and agreements with Mosel- Vitelic, hoping to increase Infineon's production lines by more than 20,000 wafers a month.
Under the terms with Mosel Vitelic, Infineon has begun receiving 48% of the output from ProMos, up from 38%. The alliance will also allow Infineon to license its advanced 0.11-micron technology to Winbond and gain exclusive access to standard DRAM chips made using this technology from the first quarter of 2003.