AMD-Fujitsu venture plans ‘mega’ Japanese chip plant

Spansion, the joint venture memory-chip maker formed by Advanced Micro Devices and Fujitsu, plans a major expansion of its chip-making capacity in Japan as part of its drive to overtake Intel and Samsung Electronics in the competitive flash memory market.

The company will convert its plant in Aizu-Wakamatsu, Japan, into a “mega-site” for advanced flash memory chip production as part of a strategy that was announced at a webcast AMD analyst briefing in the U.S. on Friday.

Spansion is banking on increasing demand for higher-capacity flash memory chips from the cell phone, consumer electronics and automotive electronics markets to make its NOR-type flash memory chips more attractive, said Bertrand Cambou, president of Spansion. AMD holds a 60 percent stake in the company and Fujitsu holds the remaining share.

NOR-type flash, which is also produced by Intel, usually trails NAND-type flash in capacity terms but Cambou hopes a new technology that enables four bits of data to be stored in each memory cell will provide the technology with an edge. The technology effectively gives each chip four times the capacity of those made by NAND-type flash chip makers such as Samsung and Toshiba.

That extra capacity is expected to be more important in the coming years, he said. Spansion estimates that the average cell phone currently contains about 180Mb of memory but that by the second-half of 2006 the average handset will contain around 560Mb. High-end handsets will contain 5Gb of memory at the same time, Cambou said.

To prepare for the anticipated increase in demand for its chips, Spansion is planning to divert money that had been earmarked for expanding its processing capacity of 200-millimeter wafers to the purchase of more advanced equipment that can handle 300-millimeter wafers, he said. The larger wafers are regarded as a more advanced production technology as each can produce several times more chips for a small increase in processing cost.

The new equipment will be housed in a factory, called SP1, that will be built alongside an existing 200-millimeter fab, called JV3, in Aizu-Wakamatsu. The SP1 factory will be the first factory to be jointly built by the two partners since they created Spansion in 2003.

“Essentially, the plan is to install SP1 and then convert JV3 to make that a mega-site (for) 300 millimeter (production),” said Cambou. “This is 65 nanometer and capable of going to 45, 30 and perhaps 20-nanometer after that.”

“This is a huge investment here,” he said without specifying the amount involved.

Japan’s Nihon Keizai Shimbun business newspaper reported in its Wednesday morning edition that the investment would total more than ¥100 billion ($954 million). The company wouldn’t comment on that report.

The first stage of the mega-fab, the SP1 plant, will be ready for production in 2007 according to current plans although that date could shift either earlier or later depending on the state of the chip industry and demand, said Cambou.

On Tuesday, South Korea’s Hynix Semiconductor and Switzerland-based STMicroelectronics signed a joint-venture agreement to construct two memory chip manufacturing lines in China. The two companies said they will invest around $2 billion in the factory, which will turn out flash and DRAM (dynamic RAM) memory chips.