News Release from: STMicroelectronics
Edited by the Electronicstalk Editorial Team on 18 November 2004
China to host $2 billion joint memory venture
STMicroelectronics and Hynix Semiconductor have signed a joint-venture agreement to build a front-end memory-manufacturing facility in Wuxi City, Jiangsu Province, China.
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STMicroelectronics and Hynix Semiconductor have signed a joint-venture agreement to build a front-end memory-manufacturing facility in Wuxi City, Jiangsu Province, China. To be dedicated to DRAM and NAND Flash production, the new fab will be especially beneficial for Hynix's stable DRAM production growth and for ST to build up its NAND Flash capacity. The joint venture is also a logical extension of the successful NAND Flash process/product development and manufacturing relationship between the companies.
Selected for its convenience and proximity to Shanghai, Wuxi City offers a skilled labour pool and a robust infrastructure.
Construction of the leading-edge fab, with a clean-room space of more than 18,000m2, is slated to begin early in 2005.
When complete, the fab will employ approximately 1500 people and will initially feature two manufacturing lines offering state-of-the-art technology: an 8in wafer line is scheduled to begin volume production in 2006, and a 12in wafer line will begin volume production in 2007.
Each line will produce, at capacity, 20,000 wafers per month.
This new fab will supplement the leading-edge capabilities of both companies while providing both with highly cost-competitive manufacturing capacity and better access to the rapidly growing Chinese market.
The Chinese market is currently 14% of the worldwide semiconductor market and is expected to achieve a compound annual growth rate of more than 20% between 2003 and 2008; already, China accounts for approximately US $1.5 billion of ST's sales.
Thanks to ST's comprehensive Flash product portfolio (including 1Gbyte NAND Flash ICs), in particular for the telecomms market, ST's memory sales are growing rapidly in China.
A significant portion of Hynix's sales is from China, attributable to Hynix's strong brand power which has been built up over many years.
"This world-class fab contributes to positioning ST as a complete solution provider, in particular in the telecom and consumer markets, with its ability to offer memory, multimedia processor, and system solutions in single packages".
"ST is showing not only its ability to offer complex system-on-chip and dedicated solutions, but also leading-edge and cost-competitive products in volume to a wide customer base", said Carlo Bozotti, Corporate Vice President of STMicroelectronics Memory Products Group.
"With this agreement ST's relationship with Hynix rises to a full-blown industrial partnership, encompassing significant joint financial commitments", added Pasquale Pistorio, President and CEO of STMicroelectronics.
"Hynix is glad to extend the partnership with ST in building a world-class manufacturing plant in China".
"Hynix believes this alliance will be mutually beneficial for each company's long-term growth".
"Having completed its business restructuring through the sale of its non-memory operations, and achieving record high profits in 2004, Hynix plans to extend its position in the memory market with the planned fab in China and through diversifying its product portfolio, which includes main memory for high-performance servers, graphics memory, mobile memory, consumer-application memory, and NAND Flash memory", said Eui-Jei Woo, Chairman and CEO of Hynix Semiconductor.
The joint-venture will strengthen Hynix's competitiveness as the company will be able to secure 300mm manufacturing facilities, and resolve the existing and potential trade issues.
The joint venture also assures STMicroelectronics of access to cost-competitive DRAM products and technology that ST can use in new designs and have manufactured to suit particular customer requirements.
The total investment planned for the project is US $2 billion.
It will be financed with equity from both partners (Hynix 67%, ST 33%), US $250 million of long-term debt from ST, as well as a financing package from Chinese local financial institutions, which will involve debt and a long leasehold.
ST and Hynix are in the process of securing the required governmental approvals and financing package.
In 2005, the equity investment from ST and Hynix is expected to reach around US $375 million, split on a 1:2 basis.
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