With Taiwan-based DRAM chipmakers allocating more of their 12-inch capacities to produce non-memory products on an OEM basis, oversupply might surface in some foundry segments of the industry, according to Chang Ching-chu, chairman of Vanguard International Semiconductor (VIS).
To avoid competition with the DRAM firms capable of providing foundry services with their 12-inch capacities, VIS focuses on products that do not require frequent process upgrades due to the cost-sensitive applications they are targeting, said Chang.
Semiconductors such as power management chips and LCD driver ICs for feature phones demand low manufacturing costs to make their end-market products more price competitive.
Second-tier DRAM makers including Taiwan-based Powerchip Technology and ProMOS Technologies have moved to expand their foundry businesses to mitigate the impact of a shrinking PC market. Powerchip's existing 12-inch fabs are capable of outputting about 120,000 wafers a month while ProMOS runs one 12-inch fab with monthly capacity of about 60,000 wafers.
VIS currently has two 8-inch fabs with a combined capacity of approximately 122,000 wafers a month. After terminating its DRAM production in 2004, VIS has become a pure-play foundry specializing in display-related ICs, and analog and mixed-signal chips.
In addition, Chang indicated that VIS will significantly lower its capex to NT$500 million (US$16.9 million) in 2012, down from NT$2.3 billion in 2011. The company will focus only on equipment maintenance and necessary process upgrades this year.