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Powerchip bows out of DRAM business

Posted: 02 Feb 2011 ?? ?Print Version ?Bookmark and Share

Keywords:DRAM? shares? wafer? foundry?

Elpida Memory Inc., being the number three DRAM maker behind Samsung and Hynix in 2010, has been considering buying shares in Taiwanese DRAM makers to ramp up its position. Presently, Elpida has entered into an agreement with Powerchip Technology Corp. to purchase all DRAM products that Powerchip will manufacture. This includes the current portion, which Powerchip has been selling as Powerchip branded products. Elpida shall sell those products as Elpida's house brand products.

Simply put, faced with another slowdown, Powerchip is exiting from DRAM business, which comes as no surprise for many. For years, the Taiwan company lost money in DRAMs. It could not keep up nor compete with Hynix, Micron and Samsung in the tough business. Alternatively, Powerchip plans to shift towards a foundry model by expanding its foundry production portion to Elpida as well as other semiconductor products and customers. Powerchip has a 300-mm foundry deal with analog chip maker Maxim Integrated Products Inc.

Elpida currently has a foundry agreement with Powerchip for DRAMs and purchases half of what Powerchip manufactures at their fabs in Hsinchu, Taiwan. Powerchip currently has 80,000 wafers per month capacity for commodity DRAM production and licenses from Elpida the right to distribute the other half of the products as their own branded products. Meanwhile, Powerchip also has a right to purchase approximately 30,000 DRAM wafers fabricated at Rexchip Electronics Corp, a joint venture between the two companies, and sell those DRAMs to their customers as their own branded products.

Once the final agreement is reached, Powerchip shall phase out the sales of own branded DRAMs and Elpida shall purchase all PC DRAMs from Powerchip to sell them as its own branded products. Such agreement would essentially enable Elpida to expand its production capacity without capital expenditures.

- Mark LaPedus
??EE Times

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