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News from Asia-Pacific

1st Silicon's Wafer Expansion Drive

Manufacturing company 1st Silicon of Malaysia will invest US$129 million to ramp up production in anticipation of an upswing in the semiconductor industry led by the emergence of new wireless, handheld and telephony products.

The semiconductor industry has suffered six sluggish quarters with analysts predicting a turnaround as late as the second half of 2003. The cautious forecast however has not deterred the foundry maker, located at the Sama Jaya Free Industrial Zone in East Malaysia, from bumping up the volume.

CEO Dr John Nelson is confident that the market cycle is at its turning point. "The end market is showing signs of recovery driven by the take off of new applications such as wireless connectivity, home networking and Voice-over-Internet-protocol," he said.

As part of the expansion plan, 1st Silicon has placed orders for the new equipment to produce 0.18-micron wafers. "Our foundry has an installed capacity of 8,500 wafers a month and we expect to increase to between 15,000 and 17,000 wafers a month by end of the year," he said, adding it will signal a steady rise of production capacity from 56% to 80%.

Nelson said that the new equipment, when installed, will be able to produce 0.15-micron and 0.13-micron wafers that are expected to fetch higher prices than the 0.25-micron wafers the company has been producing over the past several years. "We will start the development of 0.15-micron wafer this year, and probably 0.13-micron wafer next year," he added.

Break-Even Target

According to Nelson, the manufacturing technology for 0.13-micron is complicated and time consuming compared to the migration from 0.18-micron to 0.15-micron. The development phase for each product is expected to be between 12 and 15 months and qualification process of 0.18-micron wafers is underway with mass production expected in the next 4 to 5 months. "We will optimize the production of 0.18-micron wafers because of higher profit margin gained compared to what we get from the 0.25-micron wafers," he said. Projected production for 2003 is 10,000 pieces of 0.18-micron wafers and 8,000 pieces of 0.25-micron wafers. The production of 0.15-micron wafers is targeted for 2004.

The company recorded a 400% growth in revenue in 2002 and has set a target of between 100% and 150% growth for 2003. Nelson expects 1st Silicon to break even and be self-sufficient by 2004 when its monthly production hits 80% capacity at between 20,000 and 22,000 wafers a month. He added that the company will set up sales offices in Europe, Japan and Korea this year.

Also on the drawing board for 2003 are plans to set up the first fabless design house to provide wafer designs for 1st Silicon. The company is currently working with 17 fabless clients from the US, Europe and Asia and two integrated device manufacturers.

by Anita Devasahayam

(April 2003 Issue, Nikkei Electronics Asia)

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