Making memories in China

STMicroelectronics and Hynix Semiconductor are to build a billion-dollar front-end memory-manufacturing facility in Wuxi City, Jiangsu Province, China.

Construction of the facility, which will build DRAM and NAND Flash products and sport a clean-room space of more than 18,000 square metres, is slated to begin early in 2005.

When complete, it will employ approximately 1,500 people and will feature two manufacturing lines: an 8-inch wafer line is scheduled to begin volume production in 2006 while a 12-inch wafer line will begin volume production in 2007. Each line will produce, at capacity, 20,000 wafers per month.

The total investment planned for the project is $2 billion. It will be financed with equity from both partners (Hynix 67%, ST 33%), $250 million of long-term debt from ST, as well as a financing package from Chinese local financial institutions, which will involve debt and a long leasehold.

ST and Hynix are in the process of securing the required governmental approvals and financing package.

The Chinese market is currently 14% of the worldwide semiconductor market and is expected to achieve a compound annual growth rate of more than 20% between 2003 and 2008.