Chandler, Arizona–Amkor Technology Inc. and Toshiba Corp.’s Semiconductor Co. have finalized an agreement to establish joint venture contract semiconductor assembly and test services in Japan.
The joint venture company, Amkor Iwate Co. Ltd., will begin operations January 1, 2001, at the Iwate Toshiba Electronics Co. Ltd. site near Kitakami, Japan. Amkor initially will own 60% of the joint venture company, a level that eventually will be increased to 100% by the end of the third year of joint venture operations.
Amkor Iwate Co. will take over the operation of the existing assembly facility at the Toshiba Iwate site and will continue to provide packaging and test services for Toshiba under a long-term agreement. Based on that agreement, revenue to Amkor Iwate will be more than $300 million annually over the 3-year agreement.
“This landmark agreement brings a new dimension of contract microelectronic manufacturing services to Japan,” says Amkor President John Boruch. “By combining our resources with Toshiba’s highly trained staff and excellent manufacturing facility, we are taking an important first step in our strategy for expansion in Japan. Amkor has been associated with Toshiba for many years, providing packaging and test services and working closely as a partner to develop leading-edge packages for Toshiba’s semiconductor products. We now will be the only offshore company to offer contract packaging and test capability within Japan to all Japanese semiconductor manufacturers.”
The president of Amkor Iwate Co. will be Naohiko Urasaki, 50, a 32-year veteran of Toshiba Corporation. His most recent assignment was as president of Kitsuki Toshiba. He previously saw duty as senior manager at Iwate Toshiba and as general manager of Toshiba Malaysia. Other key officers will be named later.
For Amkor, the joint venture affirms its position as a worldwide leader in contract semiconductor assembly and test with a strategic entrance into the Japanese market. For Toshiba, the alliance with Amkor will provide reduced capital requirements to meet its diversifying packaging needs, advanced packaging technology, and lower costs.
The move fulfills a key Amkor strategy to expand its microelectronic manufacturing services into a Japanese assembly and test market estimated by industry analyst Prismark Partners at $8.1 billion in 1999. Toshiba announced earlier this year that it plans to outsource some of the assembly and test work it now performs, allowing it to concentrate its resources on design, process, and wafer fabrication.
Among the long-term joint venture objectives is to lower manufacturing costs for Toshiba and other customers by creating production efficiencies and upgrading the equipment. To help accomplish this, Amkor Iwate will use Amkor’s worldwide purchasing organization to achieve best-cost advantages on materials and supplies. Additionally, the joint venture will benefit from Amkor’s 30-plus years’ experience with IC package design, prototype development, manufacturing, and test. The unit will be assisted by Amkor’s worldwide sales organization to market its manufacturing and test services to other semiconductor companies in Japan and throughout the world.
In addition to the assembly and test technology currently in use at the plant, Amkor plans to introduce technology for manufacturing RF modules, vision and other advanced packages. The company also will continue work begun by Toshiba to install production and test equipment for CMOS image sensors and high-end logic devices.
The joint venture is being formed from Iwate Toshiba’s assembly and test operations, and will include manufacturing operations at two independent subcontract assembly houses. These subcontractors will operate with equipment and materials consigned to them by the joint venture. Amkor will manage the joint venture operations, including its relationship with the independent subcontractors.
The Iwate Toshiba wafer fab operation, which includes two 8-inch wafer fabs, will be the initial customer.