Infineon’s Chipmaking Activities Growing in China

Infineon Technologies, the German chipmaker says it is going to expand its
computer memory manufacturing facilities in China.

The deal is with Shanghai Manufacturing International Corp. (SMIC) to make
computer memory chips based on the 110-nanometer manufacturing process for
Infineon. As a result of the pact, Infineon says it will more than double
the amount of memory it makes, as it try to chip away at the DRAM market
lead of Samsung Electronics and Micron Technology .

Infineon will also be involved in helping SMIC in developing a fabrication
facility for wafers with 300-milimeter diameters. The move to 300-milimeter
wafers from 200-milimeter wafers will cost billions of dollars and will make
the chip fabrication plants far more efficient and productive.

Infineon said in a statement that it will be expanding its DRAM capacity
“without having to invest in production facilities.”

Infineon’s migration to more advanced chipmaking technologies with a Chinese
partner could mark a challenge for European and U.S. semiconductor
companies.

There are huge expectations regarding the potential growth of the Chinese
semiconductor market. Gartner estimates the market to spike from $16 billion
in 2002 to $31 billion by 2006.

The new Infineon-SMIC chip fab is expected to start making chips by summer
2004, and the deal will “increase its overall capacity by approximately
15,000 wafer starts per month through SMIC’s 300mm production plant, which
is currently being built in Beijing.”


Last December, Infineon and SMIC inked an agreement whereby SMIC would manufacture memory chips in its 200mm plant in Shanghai using Infineon’s 0.14-um DRAM trench technology
exclusively for Infineon.


Once SMIC’s Beijing facility gets running, the firms estimate the addition of the 15,000 wafer starts per month in 300mm technology to the 20,000 wafer starts per month in 200mm will result in a total capacity of 58,000 wafer starts in 200mm wafer equivalents.


Products from the new 300mm plant are slated to roll out in summer 2004.

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