CROLLES, France -- STMicroelectronics and Philips Semiconductors today announced plans to jointly invest $700 million to build a 300-mm wafer pilot line fab here for development of 0.10-micron processes on 12-inch diameter substrates.

The 300-mm pilot line will initially handle 1,000 wafer starts per week and ramp up to a volume of 2,000 wafers a week as needed, according to STMicroelectronics and Philips. The facility will be housed at an expansion on STMicroelectronics' Crolles site, where the two companies have been cooperating in semiconductor process development since 1992.

Last week, STMicroelectronics executives disclosed some details about the 300-mm pilot project during the Fourth Annual Fab Management Forum in nearby Grenoble. During the meeting, managers said equipment selection for the 300-mm pilot line would be handle in two phases, with the final tool set being selected in the summer of 2001. The first 12-inch wafers are expected to be running in the 300-mm pilot line in 2002.

The announcement of the pilot line comes at a time when more than a half dozen other chip companies are preparing to ramp their initial 300-mm facilities. Currently, Infineon Technologies AG in Munich and a partnership between Hitachi Ltd. in Japan and Taiwan's United Microelectronic Corp. (UMC) are racing each other to become the first to put 300-mm wafers into initial volume production next year.

During the Grenoble fab management meeting, STMicroelectronics managers predicted that as many as 22 twelve-inch wafer fabs would be set up worldwide in the next several years, but several industry executives also expressed some concern about overall equipment reliability and high pricing on 300-mm wafers (see April 10 story).

But companies worldwide are pushing ahead with 300-mm pilot line and development believing that the larger-diameter wafers will eventually lower production costs and keep the chip industry on Moore's law during the next 10 years. Several chip makers are tackling the initial pilot-line activities with partnerships to lower costs and risks.

"Our cooperation with Philips is an excellent example of the advantages of alliances in leading-edge R&D activities: it has certainly contributed to the technological leadership of both companies and has helped ST to gain new positions in the highly competitive semiconductor market," said Pasquale Pistorio, president and CEO of STMicroelectronics.

Philips also is banking on its cooperation with STMicroelectronics. "The new process technologies resulting from this cooperation will further underpin our platform concept for realizing advanced ASICs and customer specific systems-on-silicon, while at the same time preparing both companies for the advent of 12-inch wafer processing," said Arthur van der Poel, chief executive officer of Philips Semiconductors, a subsidiary of Royal Philips Electronics N.V., based in Eindhoven, The Netherlands. "This new investment therefore means that Philips Semiconductors, together with STMicroelectronics, will quickly benefit from both the process and manufacturing advantages that accrue," he added.