Elpida has been negotiating with ProMOS as the third possible foundry, together with Powerchip Semiconductor Corp. (PSC) in Taiwan and SMIC (Semiconductor Manufacturing International Corp.)in China.

When he became president of Elpida in November 2002 Yukio Sakamoto announced the restructuring of Japan's last DRAM company by implementing a strategy to outsource about 50 percent of its products to foundries.

Based on this strategy, Elpida and ProMOS signed a basic agreement last May, which calls for Elpida to license 0.10 micron and finer process technology to ProMOS. As part of the agreement, Elpida and ProMOS would participate in the joint development of next-generation DRAM processes, and the Taiwanese company would supply DRAM products to the Japanese company. Also stipulated in the agrement was ProMOS' switch of its process from a trench capacitor DRAM to a stacked capacitor DRAM for DRAMs of 0.1 micron process and below.

Negotiations broke off mainly because Elpida apparently rejected ProMOS's demands for better conditions than those offered by Elpida to the other two partners.

"The virtual capacity that Elpida planned for the future will decrease by 2 to 3 [percentage] points as a result of terminated negotiations with ProMOS," said Satoru Oyama, senior vice president of Lehman Brothers Japan Inc. "That is a minus, but not a big minus. Elpida is outsourcing commodity DRAMs and manufacturing differentiating products in house. That scenario won't change."

Elpida will compensate this decrease in capacity through ongoing negotiations with PSC and SMIC and may also seek another foundry, said a spokeswoman of Elpida.

Powerchip Semiconductor has already been supplying products to Elpida since April this year. Elpida is in the last stages of working out a foundry contract with SMIC in China after signing a memorandum of understanding (MoU)in January this year. Negotiations are proceeding forward, said an Elpida spokesperson.

Elpida completed raising funds of about 170 billion yen (about $1.6 billion) last November to expand capacity of its own fabs. Its 300-mm fab in Hiroshima has ramped up capacity to 13,000 wafers a month. The company has started sampling 1-Gbit DDR2 SDRAMs fabricated with a 0.1-micron process.

Elpida is also expanding the capacity of NEC's 200-mm fab that is now entrusted to Elpida's management from the current 30,000 wafers a month to 38,000 wafers by the second quarter next year.

By: DocMemory
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