TSMC won't
dump or sell
8-inch fabs,
says Chang

There are no plans to sell off 8-inch wafer fabs at Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC), unlike its cross-town rival, United Microelectronics Corp. (UMC). Recently, UMC said it would sell a large chunk of its 8-inch fab equipment, reportedly to an undisclosed chip maker in China.

However, TSMC has no plans to dump or sell its 8-inch fabs as well, insisted Morris Chang, chairman of Hsinchu-based company. "We will still keep them," Chang said at a semiconductor conference in San Jose earlier this week.

But then Chang joked like he was having second thoughts. "If you have a buyer, then I would re-consider," he quipped, during a presentation at the conference. --M.L.

---

Profitability for Motorola Semi
'possible' in 2nd half of 2002

Now expecting slower sales growth in semiconductor markets next year, Motorola Inc. continues to take an aggressive swing at chopping out costs from its chip business, which in the first nine months of 2001 has piled up $867 million of operating losses.

In the third quarter, Motorola's Semiconductor Products Sector cut expenses by $166 million, and it achieved its previously announced goal of eliminating 4,000 jobs, or 12% or its workforce, said Fred Shlapak, president of the business.

Speaking to financial analysts during Motorola's third-quarter earnings conference call this week, Shlapak predicted that the semiconductor business could become profitable again in the second half of 2002, if the chip markets start to a delayed recovery in Q1 or Q2 next year. Motorola has lowered its forecast for chip industry growth in 2002 to a 5-to-10% range vs. its previous estimate of 15-to-20% (see Oct. 10 story).

But recovery or no recovery, Motorola's chip business will continue to root out and eliminate costs, Shlapak promised analysts. For example, the company is keeping a tight fist on capital spending after cutting this year's budget to just $700 million vs. $2.4 billion in 2000.

"While we haven't finished our capital spending plans for next year, it will be focused only on the most mission critical items," said the president of the Austin, Tex.-based semiconductor group.

Costs in the Motorola Semiconductor Product Sector have now been chopped by more than $1 billion on an annual run rate basis, he said. In the past four years, Motorola has reduced the number of wafer fabs by 50%, from 29 in 1997 to 14 by the end of this year. Two more are scheduled to be shut down by the end of 2002.

"We are continuing to work very hard to develop a business model that fundamentally changes how we fund and run the semiconductor product sector," said Shlapak, alluding to a corporate timetable for turning around the Semiconductor Products Sector. Motorola has said publicly that it would not rule out selling or spinning off the chip business, but officials have stressed that the semiconductor group was not being singled out for divestiture.

"We assessing a variety of options and talking to potential partners. I cannot discuss a timetable of any specific right now," Shlapak told analysts on Wednesday.--J.R.L.

---

Intel's legal fight with Via
keeps growing and growing

This week, Intel Corp. fired the latest shot in its legal battle against Taiwan's Via Technologies Inc., claiming that Via's C3 microprocessor infringes on five of Intel's patents. Earlier, Intel had accused Via of infringing upon its patents in new chip sets for Pentium 4 processors.

The expanded legal attack on Via was filed in a U.S. District Court in Texas. The case is the latest move in a series of lawsuits filed by both Intel and Via against each other. Last month, Intel filed the original U.S. lawsuit against Via, which had earlier complained that the Santa Clara, Calif., company was scaring off chip-set customers with the threat of legal action (see Sept. 7 story ).

Then, Via countered sued Intel, claiming that the microprocessor giant is violating its U.S. patent in Pentium 4 processors (see Sept. 20 story ).

That lawsuit prompted Intel to expand its Pentium 4 chip-set patent fight with Via, which is now being sued in Germany, the United Kingdom, and Hong Kong in addition to the United States (see Sept. 26 story). Who knows what's next. --M.L.

---

Where's Intel's Northwood?

Be on the lookout. Intel Corp. is still sampling its yet-to-be-announced 0.13-micron Pentium 4 microprocessor line, but the company has reportedly delayed the official launch date for the new MPU family.

The processor line, code-named Northwood, was supposed to be launched by year's end. Now, the chips will not be rolled out until early-2002, according to sources.

Initially, the Northwood chips will run at 2- and 2.2-GHz speeds. At present, Intel's Pentium 4 processor line is a series of 0.18-micron devices that run at speeds at 2 GHz.

Intel has been sampling the Northwood chips since the summer. A spokesman for Intel insisted that the company has not announced the official launch date for Northwood.

"We are already sampling Northwood to our customers and we are fully on track," the Intel spokesman said. "Our 0.13 micron process is healthy."

Intel is currently shipping Pentium III processors, based on 0.13-micron technology.--M.L.

---

What's keeping Toshiba in DRAMs

Sources believe that Toshiba Corp. is still looking to exit the fickle DRAM business. The Japanese electronics giant is also still exploring a joint DRAM venture and is talking to Germany's Infineon Technologies AG and South Korea's Samsung Electronics Co. Ltd., sources said.

So, what's the holdup with Toshiba's plans? It apparently wants its "cake" and eat it too, say company observers. The Japanese chip maker would like to exit the unprofitable DRAM business, but it also wants to retain the R&D functions associated with leading-edge memories and keep a DRAM-making wafer fab under its own auspices, suggest sources. --M.L.

---

Out with the old, keeping the new?

Korea's Hynix Semiconductor Inc. is likely to obtain a financial rescue package, which will keep it alive. But at what price?

The debt-ridden chip maker appears to be in the process of unloading assets as part of the rescue, reportedly the deal involves wafer fabs. But Hynix hopes to keep its leading-edge DRAM fabs, while dump its aging plants, according to sources. --M.L.