To meet the growing demand for DRAM in the Chinese market, Tokyo-based DRAM giant Elpida Memory Inc and China-based Suzhou Venture Group Co Ltd (SVG) said today they will establish a joint venture company by the end of the year to produce DRAM in Suzhou City of Jiangsu Province, China and intend to build a 300-mm wafer fab in Suzhou Industrial Park.

The joint venture will be located on a site area of 320,000 square meters, and expects to start operations in Q1 2010, with initial production plans calling for 40,000 wafers per month (wpm), rising to 80,000 wpm at a later time.

Elpida said its 50-nm DRAM process technology will be used initially, which will be migrated to 40-nm as soon as the process is ready.

Elpida noted that it will purchase 100% of the products manufactured at the fab.

Suzhou Industrial Park Administrative Committee (SIPAC) will be responsible for fab construction and infrastructure installation with the purchase of the manufacturing equipment for 40,000 wpm capacity to be funded by the new joint venture with bank borrowings and an equity investment of $720 million shared by Elpida and SVG along with potential third-party investors.

Elpida said it plans to hold 39% of the shares that will be issued by the new joint venture company, with the remaining 61% to be held by SVG and the potential third-party investors.

Long term, the total capital expenditure for the new fab up to 80,000 wpm capacity, could reach approximately $5 billion with opportunities for capacity expansions to also be considered.

The JV combines cutting-edge DRAM technologies from Elpida, and venture capitalist SVG along with strong support from SIPAC with the combination expected to result in highly competitive and leading-edge semiconductor products that will be made available to mainly China’s domestic market along with contributing to regional economic development through local materials procurement and the creation of new jobs.

Market researchers at Gartner Inc expect PC shipments in China to grow at a compound annual rate of 18% between 2007 and 2012 and reach approximately 80 million units or 18% of the worldwide shipments, which will rapidly generate large DRAM demand in the Chinese market which the new joint venture can help satisfy.

“We believe it is critical to invest in the rapidly growing China market to better serve our customers. This joint venture opens an opportunity for Elpida to strengthen its production and marketing profile in China and the entire Asian market. In addition, we can accomplish cost efficient investments based on shared capital expenditures and shared business risks,” commented Yukio Sakamoto, president and CEO of Elpida, in a statement.

The agreement is subject to the final agreement among Elpida, SVG and the potential third-party investors, expected to be reached in the near future, the companies concluded.

By: DocMemory
Copyright © 2023 CST, Inc. All Rights Reserved