Taiwan Wins Foundry, Investment Deal from Kawasaki

Computergram International, March 16, 1999

Taiwan's United Microelectronics Corp has struck an alliance with the Japanese Kawasaki LSI Inc for .18 micron semiconductor process technology, including implementations of copper and low-k dielectric layers. As part of the deal, UMC will provide Kawasaki with foundry services to support its growing business in application specific integrated circuits and standard products.

UMC will take on all ASIC manufacturing for Kawasaki that exceeds its current capacity. Kawasaki began its ASIC business with .25 micron process technology this year, aiming at network, telecommunications and mobile computing customers. It originally proposed to open a fab for .18 micron parts in July but it has now canceled the project. Instead, it will begin retargeting its ASIC library to UMC's .18 micron in the second quarter, with volume production expected by the end of the year. It says the move will mean it can offer .18 micron ASICs a year and a half earlier than it originally planned. As part of the deal, Kawasaki says it will make a capital investment into Nippon Foundry Inc, a member of the UMC Group which is due to announce plans to increase its paid-in capital this month. Kawasaki also promises to make a capital investment in a UMC Group joint venture fab in Taiwan by mid-1999. The agreement also covers .25 micron and other process technologies, as well as embedded DRAM. UMC, Taiwan's second largest chip maker, last week reported 1998 net profits down 55% to the equivalent of $133m, due to the worldwide recession in the semiconductor industry. Revenues were down 26.5% to $557m.