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Silicon Magic plans $2b-chip plant in HK

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CIOL Bureau
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HONG KONG: Silicon Magic Corp., a US-based maker of specialty memory chips,

plans to invest $2 billion in a semiconductor plant in Hong Kong, a company

spokeswoman said on Friday. The plant would produce Silicon Magic-designed

memory chips for non-personal computer devices such as personal digital

assistants, MP3 players, and mobile telecommunications devices.

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Such specialty dynamic random access memory (DRAM) chips are expected to be

in high demand as mobile Internet applications gain momentum and command higher

prices than conventional PC DRAM chips, which are suffering from slumping

demand.

The company, founded in 1994 in Sunnyvale, California, also supplies embedded

DRAM system-on-chip products, and lists Japanese electronics giants Toshiba Corp

and Oki Electric Industry Co among significant shareholders. It currently does

not operate its own "fab", or semiconductor fabricating plant, but

relies on other foundry firms to produce its chips.

The spokeswoman said the firm planned to import about 1,000 overseas

engineers to staff the plant, and is now surveying sites in Hong Kong's New

Territories.

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Many of the staff would likely come from China. The Hong Kong government has

set up a new program to attract technology talent from the mainland, while

Taiwan, Asia's largest chip producer, does not allow workers to be imported from

China.

The fab, which would produce chips from state-of-the-art 12-inch wafers,

would likely open in 2004, after the semiconductor industry's current downturn

ends, the Silicon Magic spokeswoman said.

She added that about half of the project's $2 billion cost, about the going

rate for a 12-inch chip fab, would come from technology partners, equipment

suppliers, customers and investors. The other have may come from debt or equity

issuance, and an initial public share offering was a possibility.

(C) Reuters Limited 2001.

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