Elpida to expand DRAM production…

...as Korean Dramurai cut back theirs

Elpida, the chip maker formed from the merged semiconductor operations of NEC and Hitachi, has announced it will build a ¥180 billion fab to churn out 0.13 micron 256Mb DRAM chips.

The company's plans emerged even as Korean chip vendors become increasingly worried that the chip market is slowing down.

Elpida's new plant will be built on the site of NEC's Hiroshima facility next January. It is expected to begin volume production in the first half of 2002, when it will start punching out 300mm wafers. Maximum capacity is set to reach 20,000 wafers a month.

The facility is being paid for by Elpida, NEC and Hitachi, with Elpida coughing up ¥160 billion and the others ¥10 billion apiece.

Elpida will begin selling and marketing chips under its own name early 2001. Among its first offerings will be 0.13 micron 256Mb DRAM chips, set to sample early next year, the company has already promised.

Even as Elpida was announcing its latest investment in plant, it emerged that South Korea's major DRAM companies are doing the opposite: scaling down their production expansion plans.

According to Jay Kim, semiconductor analyst at ING Barings, Korean DRAM production is set to be cut by around ten per cent next year.

A Samsung representative did admit to Reuters that the company sees "a possibility of reducing [its] planned investment for next year". Hyundai went further and said that it has already cut its 2001 investment reduced its 2001 investment plan from 2000's won two trillion ($1.68 billion) to won 1.5 trillion ($1.26 billion). Samsung's investment in plant next year will match what it spent this year, the company said. During 2000, it spent won seven trillion won ($5.90 billion).

Kim believes Samsung will actually cut its investment by 13 per cent as the company takes a more cautious approach to capacity planning.

"In the past we planned our investment on a yearly basis," said the Samsung spokesman. "But we've decided to make the term shorter and plan it on a quarterly basis."

That, said Kim, should ensure "greater stability to emerge in the DRAM prices in the mid-to-long term timeframe" - essentially by cutting supply to match demand and thus allowing prices to stabilise. That assumes, of course, that demand doesn't continue to fall.

Demand for DRAM is sliding as fewer customers buy new PCs, a factor that's causing uncertainty in both the motherboard business and the processor market. ®

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