Hynix, ST begin work on China memory fab

LONDON — Work has begun on the construction of a memory manufacturing wafer fab in Wuxi City, Jiangsu Province, China; a joint-venture between STMicroelectronics NV and Hynix Semiconductors Inc. The companies laid the first stone at the site Thursday (April 28) in the presence of municipal, regional, and state officials from China and Korea.

The total investment planned for the project is $2 billion, financed with the equity split between Hynix and ST 67 percent and 33 percent respectively. ST is providing $250 million in long-term debt from ST and Chinese local financial institutions are providing finance, which will involve debt and a long leasehold. ST and Hynix are in the process of securing the required governmental approvals and financing package. In 2005, the equity investment from ST and Hynix is expected to reach around $375 million.

When completed the Wuxi fab is scheduled to manufacture both DRAM and NAND flash memories as an extension an existing manufacturing relationship between Hynix and ST. The factory will also provide both companies with improved access to the Chinese market.

ST said the Wuxi fab would give ST access to Hynix DRAM chips, enhancing its capabilities in delivering multi-chip package stacked memories and system-in-package integrated circuits.

A line for processing 200-mm diameter wafers is scheduled to begin production by the end of this year, initially with a manufacturing process transferred from Hynix' existing fabs in Korea. A line for 300-mm diameter wafers is due to begin production in late 2006. The China market is currently about 15 percent of the worldwide semiconductor market and is projected to grow at an annual rate of more than 20 percent through 2008.

"With this joint venture, STMicroelectronics is further reinforcing its strong integrated presence in the world's most exciting semiconductor market. Building on the successful collaboration that Hynix and ST have already achieved in process and product developments that serve our complementary interests, this new venture in Wuxi City will make ST, which is already the second largest semiconductor supplier in China, even more competitive both here and around the world," said Carlo Bozotti, president and CEO of STMicroelectronics, in a statement.

"Hynix Semiconductor has obtained solid footing to be a global memory manufacturer as we have established a global manufacturing network that connects Korea, the United States and China. Through the Joint Venture, Hynix believes the cooperative relationship between ST, Wuxi and Hynix will be further strengthened, and the new fab will be mutually beneficial for each party's long-term growth," said Eui-Jei Woo, chairman and CEO of Hynix Semiconductor, in the same statement.