ProMOS may spend $1.2 billion on new DRAM plant

Taiwanese DRAM (dynamic RAM) chip maker ProMOS Technologies plans to spend as much as $1.2 billion on a huge new chip factory next year, revising up a previous estimate because production has been smoother than the company expected.

It is one of several several new semiconductor plants for the region that have been announced recently. For end-users, the new plants should help to ensure that component prices, and therefore gadget prices, will continue to fall at a healthy pace.

ProMOS will spend at least $700 million on equipment for an advanced 12-inch (300-millimeter) chip factory already starting initial production in Taiwan. If the DRAM market remains strong when the plant is running at full capacity, ProMOS will spend an additional $500 million in the last three months of the year to add more manufacturing lines, said Ben Tseng, spokesman for ProMOS, at an investors conference in Taipei on Monday.

ProMOS had previously forecast capital spending in 2006 at $850 million. Spending this year will reach $659 million, Tseng said.

The chip maker revised up its spending forecast for 2006 because it has been able to increase production at the new factory faster than anticipated. The new plant is ProMOS’ second factory that etches chips on 12-inch round silicon wafers, which cut costs by enabling producers to make more chips per wafer than they could on older, 8-inch (200-millimeter) wafers. Thousands of DRAM chips can be made on a single wafer.

A number of Taiwanese DRAM makers have announced bold manufacturing plans for next year. Powerchip Semiconductor plans to spend nearly $1 billion in 2006 to increase production at its second 12-inch factory, which is already turning out around 25,000 wafers per month.

Inotera Memories, a joint venture between Germany’s Infineon Technologies and Taiwan’s Nanya Technology, said last week it broke ground on its second 12-inch semiconductor factory, and expects to complete the project by the end of next year.