Intel Corp and Micron Technology said on November 06 that they would form a joint venture in Singapore to make flash memory chips for consumer gadgets like digital media players by the second half of 2008.
The companies did not say how much they would invest in the new facility, but Siong-Guan Lim, chairman of the Singapore Economic Development Board, described the project in a statement as a "multibillion-dollar plant." A new chip factory, also called a "fab," can cost up to $3 billion.
The Singapore plant will be the fourth manufacturing facility to be jointly run by the companies, which formed a $2.4 billion joint venture called IM Flash one year ago to make a type of memory chip called NAND flash.
Other major flash makers include Samsung Electronics Co Ltd, the world's biggest memory chips maker, and Hynix Semiconductor Inc, both of South Korea.
Analysts said the choice of Singapore for the plant made sense as Asia is the main market for NAND memory chips.
"Singapore offers great conditions as a production base," said Michael Kim, an analyst at Korea Investment & Securities in Seoul.
"Right now, IM's market share is somewhere around 4 or 5 percent. Samsung or Toshiba would have reasons to be concerned if they themselves were unable to make more investments - but they can. So IM is not likely to represent a serious threat to them," Kim said.
The project will be set up as a separate joint venture for legal and tax reasons but will be run by IM Flash, said Intel spokesman Chuck Mulloy.
IM Flash has fabs in the US states of Idaho and Virginia and is equipping a third fab in Utah, where the venture is headquartered.
Construction of the all-new Singapore facility will start in the first half of 2007, with production expected in the second half of 2008, meaning the move will make no immediate market impact, analysts said.
Global sales of NAND flash are expected to grow 17 percent to nearly $12 billion this year amid robust demand for devices that use the chips, such as digital cameras and mobile phones, according to market research firm iSuppli.
Intel and Micron's new plant will use the latest technology that etches circuits just 50 manometers wide - about 1,000 times smaller than a red blood cell - letting the companies produce more chips per wafer of silicon and with fewer defects.
In addition, the chips will be made from 12-inch wafers, the largest available in the industry, meaning that more chips can be produced in roughly the same amount of time as using the earlier, 8-inch wafers. Intel shares rose about 1 percent to $20.71 in Nasdaq trade, while Micron was up 2.8 percent at $14.37 on the New York Stock Exchange.