NEC plans 2 chip fabs

NEC plans for two chip fabs costing nearly $3 billion in total, while

Motorola announced it had agreed to take over an abandoned Hyundai chip fab in

Scotland and spend $2 billion to make it a IC production facility.

The NEC fabs will be located in Roseville, California and Hiroshima in Japan

and construction of the facilities will start later this year. The plant in

Roseville, located 30 miles east of California’s Sacramento capital, was

originally announced back in 1998. But DRAM market conditions and the Asian

economic crisis caused the plans to be postponed. Both plants will make high-end

DRAM memories, including 256 megabit and 1 gigabit DRAMs, as well as

high-performance multimedia chips, system-on-a-chip processors and other logic

devices.

The two new plants add to other fab expansions announced by NEC in the past

months, including $900 million for facility in Yamaguchi prefecture, western

Japan, to produce system LSI chips and $100 million for expanding output of

wafers and to start producing liquid crystal display (LCD) driver chips, at a

plant in Scotland. But NEC has not decided when the new plants will begin

operating. "We have a system to install manufacturing equipment quickly, so

production at those plants will be determined by market demand," an NEC

spokesman said.

Meanwhile, Motorola said it will spend $2 billion to buy and outfit a

semiconductor plant in Scotland owned by Hyundai and use it to produce advanced

ICs for use in mobile phones. The 150-acre facility located in Dunfermline

offers 1 million-square-feet of manufacturing space. The site has stood idle

since Hyundai stopped construction in 1998. Motorola has agreed to pay Hyundai

some $160 million for the facility and will spend another $1.8 billion to

complete it.

Motorola said the plant, the company’s largest investment in Europe, will

make chips for its wireless devices as well as for other manufacturers and will

generate more than $2 billion in annual revenue once it's running at full

capacity. The market for cellular phones alone is expected to grow from 283

million units in 1999 to 410 million this year, creating a demand for

telecommunication ICs as most cellular phones will soon come with Internet

access capability.

The facility is expected to come online in 14-18 months. When fully

operations, some 1,350 people will be employed at the facility. Motorola

semiconductor group senior vice president Bill Walker said buying a building

designed for advanced chip production will shave about a year off the schedule

for bringing such a major facility online. "The plant will make a

significant contribution to revenues."