Korea's two major foundries, Dongbu Anam Semiconductor and Hynix Semiconductor Inc.'s nonmemory group, are reporting improvements in business conditions and expect solid growth in the months ahead.
Both claim their foundry capacity is now greater than 80%, up sharply from about 60% earlier in the year. Both are moving to add capacity and both say their major challenge is finding resources to expand to 0.13-micron processing.
Without much fanfare, Korea's foundries have jumped to fourth place in global rankings. Joanne Itow, foundry analyst with Semico Research Corp., Phoenix, estimated that Korean foundry revenue in 2002 totaled about $490 million, ahead of Europe, China, and Malaysia, but trailing Taiwan, the United States, and Singapore.
Samsung Electronics Co. Ltd., the world's second-largest semiconductor company, according to Semico, also has a few foundry customers but on a very limited scale. Yoon Woo Lee, president of Samsung's Device Solution Network group, said the company doesn't have further excess capacity to add more foundry business.
Dongbu Anam is still in the process of merging two foundries into a single entity. Last year, Dongbu acquired a controlling 33% interest in Anam Semiconductor by acquiring stock held by Amkor Technology Inc., Chandler, Ariz. Under Korean law, the formal merger won't be completed until later this year, but the combine is already operating as a single company.
Wesley Min, senior executive vice president of marketing, said Dongbu Anam is expecting revenue of about $330 million in 2003, up 27% from a combined $260 million for the two separate foundries last year.
Dongbu Anam benefits greatly from a foundry arrangement with Texas Instruments Inc., making DSPs that account for a majority of the wafer starts at the Anam fab in Bucheon, Korea. "The TI loading at the fab is more than 10,000 wafers a month," Min said.
That is expected to drop to a degree as TI migrates its DSPs to 0.13-micron processing, a technology that Dongbu Anam does not yet possess. "We hope to maintain a high level of loading from TI by making other chips for them, including power devices and mixed-signal devices," Min said.
Dongbu Anam plans to transition to 0.13 micron, but Min couldn't provide a timetable when that would happen.
The original Dongbu fab in Sangoo is being expanded, with wafer starts expected to double to 10,000 per month by the end of this year and double again to 20,000 by the end of 2004.
The bulk of the capital investment of $160 million the company is making this year is being spent on expanding the Sangoo fab, with another capital expenditure of $350 million slated for 2004, according to Min.
CMOS image sensors are one of the foundry's major products, he said. Dongbu Anam is also starting to ramp SoCs using the ARM 922 processor core, which it licenses. The company also uses the proprietary MEP processor core from Toshiba Corp., a minority stakeholder in the foundry.
Min said Dongbu Anam is looking into the possibility of offering embedded NAND flash memory to customers for low-cost handheld consumer electronics and smartcard products. "If we decide to do this, we will need to work with a partner on the NAND technology," he said. Toshiba, a major NAND producer, is a possible partner, Min added.
Hynix Semiconductor said its nonmemory chip revenue, which includes foundry sales, accounts for about 18% of total revenue. Semico's Itow estimates that Hynix foundry revenue last year was $245 million.
Chan Hee Lee, vice president of the System IC Co. that includes the Hynix foundry operation, said the company expects a 40% increase in its foundry business.
The Hynix foundry "is now running at 80% fab utilization, and based on customer forecasts, we should get 90% utilization in the third quarter," Lee said.
Major Hynix foundry products include power management ICs, LCD driver ICs, voltage converters, and mixed-signal devices.
Hynix now uses an older 5in.-wafer fab in Gumi and part of the 6in.-wafer DRAM Fab 5 at Chongju for its foundry operations. Lee said the Chongju fab will soon be converted entirely to Hynix nonmemory products, including foundry orders.
Like Dongbu Anam, Hynix is unable to move foundry production to 0.13-micron processing as fast as it would like. The foundry must wait to take over an existing Hynix DRAM fab that becomes surplus. And since the company's dominant memory business now needs all the 0.13-micron process capacity it can get, the foundry unit does not expect to get the smaller-line geometry for a while, Lee conceded.
Hynix still plans to spin off its nonmemory group, including the foundry, a spokesman said. The chipmaker announced its intentions a year ago to divest the nonmemory unit, and as a first step has set up the group as an in-house company. The spokesman said Hynix hopes that a separate standard-products and foundry subsidiary would attract foreign investors.