Infineon Expands Asian Production

Infineon Technologies amended its partnership with a
Taiwan-based company in a quest to supply its overseas customers with
standard memory chips or DRAM .

The expanded pact announced Friday with Winbond Electronics allows
Infineon to transfer its 0.09-micron DRAM technology and 300mm production
knowledge to Winbond’s plant in the city of Hsinchu in Taiwan. In return,
Winbond will make DRAM exclusively for Infineon.

Execs with Infineon and Winbond said they would also jointly develop
Specialty Memories for mobile applications such as PDAs, mobile phones and
smartphones. The chips support very demanding applications including
Graphics RAM in 128 and 256Mbit capacities.

“Our previous successful collaboration with Infineon in the 0.11-micron
process technology transfer has paved the way for broadening of the
partnership,” C.C. Chang, president of Winbond Electronics, said in a
statement.

Infineon is counting on its strategic partnerships, the diversity of its
product line and a global presence to pull it up a couple of notches.

Ranked the world’s fourth largest semiconductor manufacturer by analyst
firm Gartner, Infineon has been expanding its horizons beyond its fabled
DRAM products of late. Earlier this year, the company jumped into
the Flash Memory melee with its first NAND flash
memory chip.

But the field is very fickle. Revenue for the worldwide DRAM sector
reached $6.7 billion in the second quarter of 2004, a 19.8 percent increase
from the first quarter of this year, according to preliminary results by
Gartner. In the second quarter of 2004, the DRAM industry reached its
highest revenue total in four years.

“However, we are entering the height of the DRAM boom, and the industry
will be heading into a recession during 2005,” Gartner analyst Andrew Norwood said. “While the DRAM
vendors are gaining profits, they are increasing their capital expenditures
on new production facilities. These will come online in late 2005 and
through 2006, triggering an oversupply-driven downturn.”

In the case of Winbond, the two companies have worked together before. In
May 2002, Winbond began manufacturing DRAMs for computing applications in
its 200mm plant in Hsinchu, using Infineon’s 0.11-micron DRAM trench
technology. First products from the new 300mm plant, which will be built in
Taichung, Taiwan, are expected for end of 2005.

“At the same time, we are further strengthening our regional presence and
aiming overall at a leading market position in the Asia Pacific region,”
Thomas Seifert, CEO of Infineon’s Memory Products Business Group, said in a statement.

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