HSINCHU, Taiwan -- Taiwan Semiconductor Manufacturing Co. today announced an agreement to acquire complete ownership of the TSMC-Acer Manufacturing Corp. joint venture here as part of its overall efforts to increase silicon foundry capacity. The operation will be merged into TSMC once the transaction is completed by June 30, 2000.
A specific value on the planned merger was not released by TSMC or the Acer Group, which originally set up the chip manufacturing unit as a DRAM joint venture with Texas Instruments Inc. in the early 1990s. When TI pulled out of the venture in 1998, Acer began converting the DRAM fab into a logic foundry. Last June, the company agreed to sell a 30% stake in Acer Semiconductor Manufacturing Inc. to TSMC.
"The merger of TSMC and TASMC will further improve operational efficiency through integration, enabling more timely service to our customers," said Morris Chang, chairman of TSMC. "In addition, the merger will further secure our leading position in the global foundry business."
The agreement comes at a time when rival United Microelectronics Corp. is attempting to challenge TSMC for leadership in the silicon foundry business. On Monday, UMC announced a partnership with Hitachi Ltd. in Japan to set up a joint-venture company for 300-mm wafer processing (see Dec. 27 story). Hsinchu-based UMC is also pushing hard to increase its foundry capacity in Taiwan by spending $2.4 billion on wafer fab tools in 1999 (see Oct. 28 story).
Earlier this fall, UMC officials predicted the company would have $1.75 billion in foundry revenues in 1999 compared to $2 billion by TSMC. UMC and some industry analysts believe the company is narrowing the gap between itself and TSMC. In 1998, for example, UMC said its revenues totaled $1.04 billion vs. $1.52 billion for TSMC. In 1997, the gap was larger with UMC only posting $704 million in revenues compared to $1.52 billion at TSMC.
But TSMC is mounting a major push of its own to increase its capacity with plans to spend more than $2 billion next year on fab expansion. In mid-December, TSMC broke ground for a new 300-mm wafer fab in Hsinchu, and it disclosed plans to set up a second 200-mm fab in Tainan, located in the southern part of Taiwan (see Dec. 15 story).
After the merger of TASMC with TSMC, the Acer Group "will become one of the major shareholders of TSMC," said Chang. "The Acer Group's participation within TSMC will provide stronger adhesion to the relationship between the two already close allies," he said.
For the past six month, TSMC has been responsible for the management of TASMC's facility. The former DRAM fab has been re-engineered by TSMC as a pure-play foundry.
The absorption of TASMC into TSMC will enable Acer to focus more of its resources on personal computers, peripherals, and components, said Stan Shih, chairman and CEO of Acer. "Also, Acer will focus on reinforcing its IC design innovation to create new market demands for IC products," he said.
Under the merger agreement, six shares of TASMC will be swapped for one share of TSMC. The ratio will be adjusted in a limited range according to TSMC's stock price.