TOKYO Hitachi, Ltd. and United Microelectronics Corp. (UMC) announced this week they have expanded their foundry relationship and will build a 300 mm wafer fab for system-on-chip logic devices.
The joint-venture fab, expected to be up and running next year, will use Hitachi's N3 building in Hitachi's semiconductor manufacturing base in Hitachinaka-city, Ibaraki prefecture, Japan.
The two companies will establish the unnamed company in February. Hitachi will own 60 percent of the entity and UMC will hold 40 percent. With about 70 billion yen ($685 million) investment, the fab will have a capacity of 7,000 300 mm wafers per month using a 0.18 micron or deeper process. The fab will begin pilot operation in January 2001 and volume production in April 2001.
Hitachi plans to fabricate system-on-chip devices and memories that Hitachi calls "system memories" such as flash and SRAMs. SH-4 and SH-5 processors and related devices will position in the fab's portfolio, said Masahiko Ogirima, senior vice president of Hitachi Semiconductor & Integrated Circuits group. Hitachi intends to fabricate DRAMs in Singapore and has no intention to use the joint venture for DRAMs.
UMC also intends to fabricate logic such as system-on-chip and FPGAs to supply worldwide customers.
"We have chosen 12-inch wafer because engines of SoC will be larger and larger and so as peripheral circuitry. It will soon be not efficient to use 8-inch wafers," said Ishibashi of Hitachi. Hitachi had already disclosed its intention to make N3 a 300 mm wafer fab.
"Hitachi is expecting that the sale of this year will exceed projection of 660 billion yen (about $6.5 billion) at the beginning of this fiscal year. So we want to establish sufficient production capacity as quickly as possible. We also want to make the joint venture as the strategic base of system-on-chip devices," said Tadashi Ishibashi, president and chief executive of Hitachi Semiconductor and Integrated Circuit group.
Avoiding the Greenfield Effect
"There already exists a building. So we can save time and can begin operation quickly," said John Hsuan, CED of UMC group. UMC plans to launch its own 300 mm wafer fab operation in Tainan about a half year later than the joint venture. "Even a half year is significant. We believe the alliance with Hitachi is valuable and we can merge our technical expertise at the joint venture," Hsuan added.
One of the unusual parts of this joint venture is the speed with which it was made. "We have been providing foundry services for Hitachi for about a year," a UMC spokesman said. "This 12-inch fab deal though began in September and was a done deal in just three months."
Cost reduction is another important reason. By shifting to 12-inch wafers, the two companies expect that they can lower the cost of each part about 25-30 percent compared with that of 8-inch wafers.
Hitachi has a partnership with NEC in DRAM. "The DRAM alliance with NEC involves design and R&D of DRAMs and fabrication is done respectively. The alliance with UMC involves fabrication only. Design and R&D are not involved in this alliance. Each company does it respectively," Ogirima said.
The joint venture will be one of the early attempts to shift 300 mm wafers. "About 90 percent of the production equipment are available. The remaining 10 percent will also be available with sufficient performance by the time next year when we practically install it," Ogirima added.
"But the cost of equipment is about 20 percent higher than our budget. Hopefully, we want to negotiate with equipment supplier to lower the cost within the range of about 10 percent higher than equipment for 8-inch wafers," he said.
Wafer cost presents another challenge. "The cost presented by wafer manufacturers is about three times as expensive as the same space of 8-inch wafers. We hope the cost per the same space will drop to the same level as 8-inch wafers when we begin volume production," said Ogirima.
--additional reporting by Mark Carroll