San Mateo, Calif.- Japanese DRAM vendor Elpida Memory Inc. expects to tap Chinese foundries as part of its long-term plan to outsource 50 percent of its DRAM production, said newly-appointed president Yukio Sakamoto in an interview with EE Times.
The company will consider shifting some production to a mainland China by 2004, after it cranks up production capacity at its main production facility in Japan and its foundry partner in Taiwan.
Sakamoto said China is building a credible semiconductor industry, and cited Texas Instruments' recent decision to outsource some of its leading-edge DSP production to Semiconductor Manufacturing International Corp. as evidence.
"After I saw that TI is starting 0.13-micron production, I thought 'Why can't we?'," he said.
Sakamoto mentioned Semiconductor Manufacturing International Corp. and Grace Semiconductor Manufacturing Corp. as likely possibilities, though no final decision has been made. One incentive for moving some production to China is to take advantage of tax breaks on products made on Chinese soil, he said.
NEC Corp., which owns half of Elpida, already has a stake in fabs in Beijing and Shanghai. Equipped with 0.18-micron production tools, the Shanghai fab is the most advanced of the two, but DRAM production there is being phased out and most of the ownership has been transferred to the Chinese government, Sakamoto said.
In the meantime, Elpida will focus on bringing Taiwanese foundry Powerchip Semiconductor Corp. up to speed on Elpida's 300-mm wafer and 0.11-micron DRAM process next year. Powerchip currently builds DRAMs for Japan's Mitsubishi Electric Corp., which recently transferred its DRAM operation to Elpida.
How quickly Elpida seeks foundry partner in mainland China "is heavily dependent on how much capacity we can get from Powerchip," Sakamoto said.
Elpida is also bringing up its 300-mm production line in Hiroshima, Japan. By next spring, it will shift part of its 0.13-micron DRAMs to 300-mm wafers and every succeeding process generation starting with 0.11-micron will use the larger wafers. Sakamoto said the manufacturing upgrades in Japan and Taiwan should double Elpida's production capacity by next year.
Elpida's decision to lean heavily on outside foundries is unusual when compared to industry leaders Samsung and Micron, both of which manufacture their chips internally. But Sakamoto said he's promised to make Elpida profitable by the end of next year, and that utilizing foundries was the best way to keep capital expenditures under control during bad times.
"In order to stabilize our financial performance we need 50 percent of capacity coming from our foundries," he said.
