SHANGHAI, China The decision by an affiliate of China's Hua Hong NEC (HHNEC) to back away from an earlier commitment to build a 300-mm wafer plant makes sense for the company, an iSuppli Corp analyst said Friday.
"I never felt that HHNEC or the Hua Hong Group's strength was in 300-mm foundry. If you look at the their existing customer base and their technology, converting to or opening a 300mm did not fit. HHNEC has absolutely no experience at advanced processing and copper," said Len Jelinek, iSuppli's semiconductor analyst who is currently travelling in China.
Earlier this week, a Hua Hong NEC affiliate, Hua Hong Semiconductor International, acknowledged it was mothballing plans for a 300-mm wafer fab in Shanghai, opting instead to build up a 200-mm wafer line. Few details were given regarding the change. A spokeswoman would only say that the 200-mm line will add to the foundry capacity of Hua Hong NEC.
Rumors have circulated in China for the past few months that Hua Hong was delaying orders for 300-mm wafer equipment. Originally, the company planned to set up a pilot line running 3,000 to 5,000 wafers per month by year's end. The 300-mm wafer fab was part of a larger vision of transforming Hua Hong Group into an international caliber IDM.
Jelinek said companies wanting to do 300mm in China will face the same key pressures that all of the gargantuan projects do. "When you look at the applications and the large customers that need 300mm fabs you have to ask how many more are really required. I think this was the overwhelming issue, not only with HHNEC but other companies here in China," he said.
After a brief honeymoon period, expectations are moderating for the growth of new fab ventures in China. In January, IC Insights had estimated domestic Chinese IC production would be around $12 billion by 2010. That has now been downgraded to roughly $7 billion.
"The Chinese foundries have really been losing momentum after their startup phase and we will need to see if more companies follow Hynix/ST and if Taiwan ends its restrictions on (Chinese) production. It could be higher if these things happen," said Bill McClean, principal analyst at IC Insights.
China currently has one operational 300-mm wafer fab, run by Semiconductor Manufacturing International Corp in Beijing. SMIC is building another 300-mm line in Shanghai. In Wuxi, a joint venture between Hynix Semiconductor and STMicroelectronics is ramping up a 300-mm wafer fab.