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Infineon backs out of ProMOS venture

Posted: 12 Dec 2002 ?? ?Print Version ?Bookmark and Share

Keywords:infineon? promos technologies? mosel-vitelic? dram ic?

Infineon Technologies is breaking off all dealings with its Taiwan joint venture, ProMOS Technologies, because of unresolved disagreements with its Taiwan partner in the venture, Mosel-Vitelic Inc.

Infineon said that it will stop buying DRAM chips from ProMOS as of January 1, 2003, and will not transfer any more technology to the venture beyond 0.115m. It may, however, not even go that far if it can find a way to extract itself from an existing technology agreement.

Infineon has a 30 percent stake in ProMOS, which it will sell as soon as possible, but it buys about 40 percent of the chips produced there. Mosel, which owns a 37 percent stake, and Promos sell the rest. ProMOS runs one of the world's first 12-inch wafer fabs, as well an 8-inch facility, and accounts for about 10 percent to 15 percent of Infineon's output.

Like many DRAM makers, Mosel has been leaking money in the sour market for DRAM chips. The catalyst for the split comes from Mosel's use of shares in the joint venture as collateral for bonds, which come due in 2003. "Despite repeated efforts by Infineon, the parties were not able to find a mutually acceptable solution," Infineon said in a statement, adding that it could not "trust" Mosel.

A spokesman for Mosel did not return calls seeking comment. A Singapore-based Infineon spokeswoman said that the company would withdraw about 30 engineers form ProMOS, but said no timeline had been set. She also indicated that ProMOS may not be able to sell products that are made using Infineon's process technology now that the two have broken up, which could severely cripple ProMOS's production.

ProMOS has rejected that notion. "We have retained quite a number of lawyers," said a ProMOS spokesman, and "we have the right" to sell products based on Infineon's technology as long as licensing payments continue, he added.

Japan to the rescue

Because Mosel and Infineon have been on rocky ground for some time, ProMOS officials have been making a back-up plan that involves Elpida Memory Inc. A ProMOS official told EE Times that the company is nearing the end of negotiations with the Japanese memory maker, but he could not say when an official announcement would be made.

Such a transition of technology backers could be difficult for ProMOS, which uses trench technology. Elpida uses stack technology. Micron Technology Inc. took nearly a year to convert the Virginia fab it bought from Toshiba Corp.

ProMOS is confident, though, that its experience will be less painful. The company plans to start the transition during the ramp-up stage in phase two of its 12-inch wafer fab so as to have as little impact as possible on its overall output. "If you were talking about a fully loaded fab, it would be difficult to maintain efficiency," said Albert Lin, a ProMOS executive that has been negotiating with the Japanese for nearly a year.

Still, the company must now simultaneously grapple with transitioning to 12-inch wafers, finer geometries and a new manufacturing process. That is certain to create hiccups that should bring some capacity temporarily off line, said Andrew Norwood, a London-based semiconductor analyst with market researcher Gartner Dataquest. "It is not going to be easy, but they do not have much of a choice do they?" said Norwood. "Their skill came directly from Infineon and now they are walking away."

Lin said he saw the break as an opportunity for ProMOS to stand on its own. "This is probably too strong a word, but it will be 'liberating,'" he said. In a statement, the company said that along with Mosel, it will expand product lines and "intensify niche product co-development projects with partners."

Even though a deal has not been finalized yet with ProMOS, Elpida has shown that it is on the look-out for partnerships. As part of an agreement to merge with Mitsubishi Electric's DRAM operations, Elpida recently struck a technology-for-capacity deal with Powerchip Corp., a Taiwanese DRAM maker with close ties to Mitsubishi.

Powerchip runs a 12-inch wafer plant that is expected to produce 15,000 wafers per month by the end of this year, which will dovetail nicely with the ramp up of Elpida's first 12-inch wafer venture, located in Hiroshima. Powerchip hopes to build another 12-inch wafer fab in 2004.

Currently, Elpida makes DRAM through a foundry arrangement with NEC Hiroshima and Hitachi Nippon Steel Semiconductor in Singapore. Elpida's own 12-inch wafer facility will start production by January 2003.

On to China

Infineon, too, seems to have crafted a back-up plan. The company said it would push into the China market with its technology-for-capacity strategy, swapping 0.145m DRAM trench technology with foundry Semiconductor Manufacturing International Corp. (SMIC) in return for an exclusive agreement to make standard memory chips for Infineon. The deal also includes an option to trade 0.115m technology in future.

Pilot runs at SMIC will begin in mid-2003, starting with 256Mb double data rate DRAM chips, and if the commodity memory market outlook improves, then the Chinese foundry could produce higher densities, too. By 2005, Infineon estimates the partnership will boost its capacity by about 20,000 wafer starts per month.

- Mike Clendenin

EE Times

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