Elpida to outsource some chip production

ProMOS will use as many as 35,000 wafers a month to make chips for Elpida, Hiroshi Tsuboi, a spokesman at the Tokyo-based company, said, confirming an earlier Nikkei newspaper story. The chips will be made on wafers measuring 300 millimeters in diameter and based 65-nanometer manufacturing technology, he said.

According to Nikkei, Elpida, the world's third-largest DRAM maker, is seeking collaboration with Taiwanese partners to form a stronger competitive force against South Korean DRAM firms.

The Elpida-ProMOS partnership is said to begin on a trial basis in the first half of 2010 and go into mass production in the latter half of the year.

With ProMOS, the eighth-largest in the world, joining its force, Elpida's output is expected to increase by a significant margin. Right now, Elpida's monthly output is 220,000 wafers, together with Powerchip Semiconductor Corp., the Japanese firm's Taiwan strategic partner.

With ProMOS, Elpida's production is expected to increase to 250,000 a month, which comes close to the 300,000 to 400,000 for South Korea's Samsung and Hynix.

In April, Elpida agreed to receive NT$7.2 billion in funds from Taiwan Innovative Memory Co. (TIMC) to compete with South Korean companies.

TIMC was formed to restructure the DRAM industry, which had suffered big losses from the end of 2008 to the first half of 2009 due to the global financial crisis. The intention was to let TIMC consolidate individual DRAM firms in Taiwan.

However, over the past four months, the DRAM industry saw a turnaround, with most of the companies starting to make money again. This has lowered Elpida's willingness to team up with TIMC as a restructure effort.

Elpida Thursday reported its first quarterly operating profit in two years after industrywide output cuts eased oversupply and helped drive up prices.

Hsinchu, Taiwan-based ProMOS climbed 3.9 percent to close at NT$2.15 yesterday, its highest since Oct. 28.

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