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Promos signs tech pact with Elpida

Posted: 08 May 2003 ?? ?Print Version ?Bookmark and Share

Keywords:promos technologies? elpida memory? memory system? sram? infineon?

Promos Technologies Inc. and Elpida Memory Inc. announced they will form a technology alliance, which gives the Taiwan company access to key process technology and helps the Japan firm line up more capacity without investing massive amounts of capital.

The announcement was made in Taipei during the signing of a memorandum of understanding (MoU), which should be followed by a final agreement within months, a Promos spokesman said. The companies described the partnership as a "license and joint-venture development agreement."

The framework of the deal calls for an immediate transfer of 0.105m stack technology to Promos, which would be slowly ramped up in the company's 8-inch wafer fab but not its 12-inch wafer fab. Promos is currently using the trench capacitor technology from Infineon Technologies AG, but has been doing some work with stack technology in anticipation of a deal with Elpida.

Elpida and Promos would also co-develop memory products as well as deep-submicron process technology beyond 0.105m. Promos plans on increasing its research and development division to do so, partly by taking on engineers from one of its parents, Mosel-Vitelic Inc., which is transitioning out of the commodity DRAM business.

At this point, no money is changing hands between the companies and it's unknown whether Elpida will eventually make an equity investment in Promos. It appears that lots of details still need clarification, including capacity allocation to Elpida, a schedule for implementing the deal and the products that will be jointly developed.

Long time coming

The two companies have been negotiating for at least several months as Promos has looked for a second technology source to replace Infineon, which ended its cooperative alliance in January. Together, Infineon and Mosel own Promos.

A falling out with Mosel led Infineon to stop transferring technology and buying chips from Promos, forcing the joint-venture firm to look elsewhere for process technology and a potential partner for future fabs. Promos hopes to start building a second 12-inch wafer fab in mid-2004 and it's likely that Elpida would be the partner, analysts have said.

That's because Mosel neither has the means or the interest to stay in the capital intensive commodity DRAM market. The company is struggling to pay off debt and has already defaulted on one bond obligation, which was collateralized with 900 million shares from Promos.

The use of those shares as guarantee was cited by Infineon as the main reason for the falling out. Promos executives and observers of the tussle, however, have suggested that Infineon wanted more capacity from Promos, as much as 90 percent, which executives there are unwilling to give.

"We need room to grow," said Albert Lin, a Promos executive and leader of a new unit that will start selling Promos-branded DRAM in 2H of this year. "We are interested in settling this dispute, but 90 percent is out of the question."

In its early stages, the feud among the three companies was quite public. But recently, Promos and Infineon executives have been more low-key in their communications, suggesting that the relationship may be salvageable. Executives from the two firms will meet this month, Lin said. "Their primary interest is in getting capacity from our 12-inch fab, which is now yielding better than our 8-inch fab."

Promos expects its second 12-inch wafer fab to start mass production in 2005. The fab will use stack capacitor technology and, in addition to DRAM, it may also produce flash, pseudo-SRAM or MRAM, Lin said. Promos' operational 12-inch wafer fab is producing about 9,000 12-inch wafers per month and is scheduled to ramp to 13,500 per month by year's end.

- Mike Clendenin

EE Times

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