Memory maker Qimonda plans $2.7B fab

Qimonda's announcement comes despite rising DRAM supply that is expected to outpace demand in the short term

Despite forecasts of excess supply next year in the DRAM (dynamic RAM) market, Qimonda, the world's second-largest memory maker, plans to build a 300-millimeter fabrication plant in Singapore to boost production.

Over the next five years, Qimonda will spend €2 billion ($2.7 billion) on the plant, which will have 20,000 square meters of clean-room space and a monthly production capacity of 60,000 wafers. Construction on the plant, expected to employ up to 1,500 workers when running at full capacity, will start later this year, and production is slated to begin in 2009.

The Singapore fab will be Qimonda's third wholly owned 300mm plant, alongside similar plants in Dresden, Germany, and Richmond, Virgina.

Qimonda's announcement comes against a backdrop of rising DRAM supply that is expected to outpace demand in the short term. "In the long term, the DRAM market will grow gradually, despite a correction in 2008 that will be caused by new (300mm) fabs," wrote IDC analysts Soo-Kyoum Kim and Shane Rau in a March report.

By the time Qimonda's Singapore plant comes online, that expected correction should be history, based on IDC's forecast.

Longer term, prospects for the memory remain solid. DRAM demand will increase at a compound annual growth rate of 43 percent between now and 2011, driven mostly by the need for memory in computers, the IDC report said.

Qimonda said it chose Singapore for the new plant to be closer to major customers in Asia. "In addition, we can benefit from local competitive cost structures and manufacturing know-how and finally further reduce our exposure to exchange rate fluctuations compared to the U.S. dollar," said Kin Wah Loh, the CEO and president of Qimonda, in a prepared statement.