As part of a joint venture agreement inked last November STMicroelectronics and Hynix Semiconductors has laid the first stone at the site of their front-end memory-manufacturing facility in Wuxi City, Jiangsu Province, China.
The new fab is to manufacture both DRAM and NAND flash memories.
The total investment planned for the project is $2 billion to be financed with equity from both partners, with Hynix contributing 67 percent and ST at 33 percent, along with $250 million of long-term debt from ST, and financing from Chinese local financial institutions.
The companies are in the process of securing the required governmental approvals and financing package. This year, ST and Hynix are expected to invest $375 million combined.
Hynix is relying on the joint venture relationship with ST as a “firm base” for its long-term competitiveness in securing 12-inch manufacturing facilities with a minimum investment, as well as the ability to utilize a cost-effective manufacturing environment and maintain its leading position in the fast-growing Chinese market, the company said in a statement.
Seoul, Korea-based Hynix also said the fab would provide it with another global manufacturing facility that would resolve trade issues including countervailing duties imposed on the company’s products in the U.S. and Europe.
From ST’s perspective, the company looks to the fab to allow it to better serve its key telecom and consumer customers with memory, multimedia processor, and system solutions in single packages on leading-edge technologies.
In particular, Geneva, Switzerland-based ST said the fab would give it access to high performance, low-cost DRAM chips, enhancing its capabilities in delivering multi-chip package (MCP) stacked memories and system-in-package (SiP) products.
At the new fab site, an 8-inch wafer line is scheduled to begin production by the end of this year, initially with a stable manufacturing process transferred from Hynix’ existing fabs in Korea. Shortly thereafter, a 12-inch wafer line is expected to begin production in late 2006.
“Hynix Semiconductor has obtained solid footing to be a global memory manufacturer as we have established a global manufacturing network that connects Korea, the U.S. and China,” said Eui-Jei Woo, chairman and CEO of Hynix, in a statement.
“Through the joint venture, Hynix believes the cooperative relationship between ST, Wuxi and Hynix will be further strengthened, and the new fab will be mutually beneficial for each party’s long-term growth,” he noted.
