NEC mulls $1B DRAM fab

Electronic News, August 29, 1994 by Anthony Cataldo

TOKYO -- Prodded by swelling demand for 16-megabit dynamic RAMs worldwide, NEC Electronics said it is mulling over which of two current manufacturing sites in the U.S. and the U.K. is to serve as its nest sub-micron DRAM fab, estimated to cost $1 billion. "NEC is considering building a new semiconductor plant in either the United States or Great Britain," a spokesman said. "We are still in negotiations regarding the siting of the plant. Various factors are being taken account, including respective markets, material and labor costs, et cetera. We are close to making a decision and should be able to make an announcement sometime in September or early October."

NEC will also dole out $200 million for expansion of its existing U.S. and U.K. sites: A Roseville, calif., plant will take in $140 million to lift its production capacity from 23,000 to 35,000 wafers each month, and a Livingston, Scotland, facility will receive $60 million to increase wafer production from 20,000 to 23,000 a month. Officials of both areas reportedly are lobbying for the new plant.

The timing, he said, was dictated by worldwide market conditions--last year semiconductor sales in Europe, North America and South East Asia have been rising steadily. Japan, however, has only recently shown signs that it is emerging from its sagging demand for DRAMs, which streched NEC's capacity and pronpted the company to accelerate its production efforts. "NEC does 80 percent of its semiconductor sales in Japan. Up until now, we've been able to handle the overseas market because of the slump here."

Locating offshore would also help to insulate the DRAMs from the rising yen, resulting in a reverse import scenario. "We can gain from the high yen in that case. It does help us to produce overseas in many ways," the spokeman said.

Word of the search for a new facility came one week after NEC announced it was shifting between 30 to 40 percent of its total ASIC production to the Taiwan Semiconductor Manufacturing Corp. In June, the company said it would also pump $70 milliom over the next four years to expand its site in Ireland to produce 4 and 16-Mbit DRAMs, ASICs and microcomputers (EN, June 13).

The newest envisioned fab would process 8-inch silicon wafers at a 0.35-micron design rule for 16 and 64-Mbit DRAMs and advanced ASICs, the spokesman said. It will be modeled after NEC's most recently-built number 8 plant in Kyushu, Japan. The company said it wants to begin building the new fab by next year and have it in full production by the end of 1996. NEC's production schedules call for its 16-Mbit DRAMs to increase from two million units a month by the end of 1994 to 3 million by 1995. The spokesman said production levels for its 4-Mbit DRAMs have already peaked at 12 million each month.