Powerchip Technology will quit the sale of commodity DRAM chips and instead shift all of its commodity DRAM capacity to the production of DRAM parts for Elpida Memory on an OEM basis, according to company chairman Frank Huang.

Powerchip aims to reduce the ratio of commodity DRAM chips to its total capacity to below 50% by the end of 2011, while pushing up the proportion of the six major OEM business – the LCD driver ICs, CMOS sensor ICs, NOR and NAND flash chips, power management ICs and wafer foundry, Huang stated.

The steep fall of DRAM chip prices in the fourth quarter of 2010 was considered the main reason for Powerchip to transit to OEM business – a move which is likely to ignite a consolidation of the DRAM industry in Taiwan and Japan, said industry sources.

The policy shift aims to reduce the company's reliance on the PC market and also avoid the drastic fluctuation of DRAM chip prices, said Huang, noting that Powerchip will then move toward applications for tablet PCs and smartphones.

Powerchip's current 12-inch fab has a capacity of 120,000-130,000 wafer starts a month, and commodity parts accounted for 67% of total production in the fourth quarter of 2010. Additionally, Powerchips also owns a capacity of 28,000 wafer starts a month, at Rexchip Electronics, in which Powerchip holds a 35% share.

After signing a contract agreement with Powerchip slated for this quarter, Elpida will have a total capacity of 150,000 12-inch wafer starts a month in Taiwan, including 80,000 units from Powerchip, 50,000 units from Rexchip and 20,000 units from ProMOS Technologies.

By: DocMemory
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