Elpida, Powerchip seek No. 1 spot in DRAM

It was an unlikely spot to make such a bold statement. Standing in front of a mound of dirt in the middle of a barren field surrounded by rice paddies, Elpida Memory's chief executive officer vowed on Friday to unseat Samsung Electronics from the top of the global DRAM industry.

Elpida and Powerchip Semiconductor, the largest memory chip makers in Japan and Taiwan, respectively, will work together to take the top spot in the global DRAM market, Elpida CEO Yukio Sakamoto said.

"Elpida and Powerchip will be number-one in market share in two or three years," he said, adding that the companies together aim to control one third of global DRAM output by that time. Elpida has been working with Powerchip for the past few years, trading technology for a portion of the Taiwanese company's output.

Taiwanese DRAM makers often turn to overseas partners for technology, such as Nanya Technology's work with Germany's Infineon Technologies. Taiwanese investment incentives encourage companies to build expensive chip factories on the island, keeping chip production costs among the lowest in the world. Combined with technology developed overseas, it makes a powerful competitor.

Sakamoto made the comments in front of a pile of dirt set up for the ground breaking of Powerchip's latest factories in central Taiwan, in an industrial park so new that it's mostly still fields surrounded by local farms. Within the next few years, the Central Taiwan Science Park will likely host the largest concentration of advanced 12-inch chip plants in the world thanks to investments by the island's chip makers.

Powerchip announced plans Friday to spend NT$300 billion (US$9.2 billion) on four huge new factories in the park. The groundbreaking was for two of the new factories, dubbed 12-inch due to the size of the silicon wafers used in the chip making process. The plants are replacing older 8-inch factories because they reduce production costs by as much as a third.

The new plants will produce chips on up to 70,000 wafers per month by the time they're in full production, which will likely take a few years. Powerchip already operates two 12-inch plants in Taiwan and is moving equipment into a third around the middle of this year, dubbed 12M. It expects production at 12M to reach 10,000 wafers per month by the end of this year. Thousands of DRAM chips can be made on a single silicon wafer.

The new factories in the science park will create up to 6,000 new work opportunities when they're completed, said Frank Huang, chairman of Powerchip, during a speech at the ceremony.

The company's other technology partner, Japan's Renesas Technology, also sent a high ranking executive to attend the ceremony. The two chip makers work on flash memory together.