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Report: TSMC, Hynix in discussion over $1B fab purchase

Posted: 06 Jun 2007 ?? ?Print Version ?Bookmark and Share

Keywords:200mm wafer fab? 300mm wafer? CMOS sensors?

Taiwan Semiconductor Co. Ltd is reportedly hammering a deal with Hynix Semiconductor Inc. that would see the foundry shell out almost $1 billion to purchase a 200mm wafer fab with a capacity of 129,000 wafers per moth.

According to a report from CLSA Asia-Pacific Markets, TSMC and Hynix are in talks. "We hear they are close to a deal," said CLSA analyst Ming-kai Cheng, who wrote the research note issued Monday (June 4).

A TSMC spokesman would not comment on the report, but reiterated the company is interested in buying mainstream 200mm wafer capacity.

CLSA thinks the deal will be good for both TSMC and Hynix. TSMC gets an immediate 12 percent boost in capacity and Hynix gets to dump capacity that's unsuitable for commodity DRAM while at the same time filling up its coffers for future 300mm wafer expansion.

Most TSMC fabs are in Taiwan, but it does operate two overseas plantsone in Shanghai and another in the U.S state of Washington. "Operating risk exists but would not exceed that of operating in the U.S.," Cheng wrote.

TSMC needs to add mainstream capacity for a couple of reasons. Leading-edge 300mm expansion is going well, but some companies remain stubbornly reluctant to make the transition.

"One of the issues with technology migration is that it's incrementally expensive to design into and hence rate of adoption is slowing," Cheng wrote. "While TSMC, together with its larger customers, remains at the forefront of the migration curve, growing demand for 200mm implies that TSMC is losing market share on mature platforms as it mainly focuses on leading edge capacity expansion (300mm)."

Short on mainstream capacity, TSMC has been forced to pass along orders for 180nm to its affiliate, Vanguard Semiconductor, and has even tapped Powerchip Semiconductor for CMOS sensor production. In the first quarter, TSMC derived 51 percent of its revenue from 0.15 ?m and less advanced technology nodes. (0.15 ?m and 0.18 ?m accounted for 30 percent of sales.)

If the deal goes down for slightly under $1 billion, then Cheng believes TSMC's return on investment would be a respectable 30 percent. That assumes TSMC can efficiently transition the fab to logic production. Vanguard was able to do it, so Cheng believes TSMC can as well.

CLSA believes the potential deal will boost TSMC revenue and profit by 6.4 percent and 6.1 percent, respectively, based on its current 2008 estimates.

- Mike Clendenin
EE Times

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