Infineon to invest $240M in Chinese chip venture

Looking to grab a larger chunk of the Chinese memory market, German chipmaker Infineon Technologies AG plans to invest US$241 million over the next five years in a joint-venture company that will construct a test and assembly facility for memory chips in China, the company said Monday.

The announcement provides a crucial back-end manufacturing capability for Infineon in the world’s most populous country. Based in Munich, Germany, the company already has a deal with contract chip maker Semiconductor Manufacturing International Corp. (SMIC) to manufacture computer memory chips in Shanghai, and hopes to capture about 40 per cent of the Chinese memory-chip market, the statement said.

The joint venture will allow Infineon to take finished silicon wafers containing memory chips from SMIC and package those chips for use in personal computers and other devices.

The test and assembly facility, which will be based in Suzhou, Jiangsu province, will be jointly owned by Infineon and China-Singapore Suzhou Industrial Park Venture Co. Ltd. (CVSC). Infineon will own 72.5 per cent of the shares of the joint venture, with the balance held by CVSC, Infineon said.

The two companies plan to invest a total of US$1 billion in the joint venture over the next 10 years. To get things going, Infineon will invest US$241 million over the next five years, with CVSC putting in an initial investment of US$91.6 million, to cover the cost of building the facility, related infrastructure, and equipment, the statement said. Further investment would be required primarily to cover the cost of additional equipment for the plant, it said.

Construction of the test and assembly facility is slated to begin in October 2003, with volume production to start in early 2005, the statement said. When running at full capacity the plant will employ more than 1,000 workers.

Silicon wafers processed at the Suzhou plant will primarily come from SMIC in China, as well as two Taiwanese memory makers, Winbond Electronics Corp. and Nanya Technology Corp., Infineon said. In addition, some wafers from Infineon’s plants in Dresden, Germany, and Richmond, Virginia, will also be processed there, it said.

The Suzhou test and assembly facility will complement two similar Infineon facilities, one in Portugal and another in Malaysia.