Dongbu expands, aspires to be no. 3 foundry


Paula Doe

Contributing Editor, WaferNews

Dongbu Electronics seems jinxed with the world’s worst timing. It was bad enough that the company built some of the industry’s biggest cleanrooms and jumped into the foundry business, just as the industry nosedived. Then it invited the world’s analysts and journalists to the opening to show off its progress and pave the way for a second round of financing — the week of the World Trade Center disaster.

But the Korean construction and steel company remains determined to continue on plan to become a major player in the semiconductor foundry industry.

Dongbu Electronics aims to be the second source for TSMC customers and the main supplier for a growing Korean fabless industry, and hopes to parlay that strategy into challenging Chartered Semiconductor for number three in the foundry business. The company has its first 5,000 wafers/month line up and running for 0.25-micron production, aims to have 0.18-micron qualified by October for production in November, and 0.13-micron ready by 2Q02. Executives are continuing to prepare to seek a second round of financing to expand capacity to 20,000 wafers/month by next summer, then to 45,000.

“This is the first of seven fabs that will be built over the next few years,” said Dongbu Electronics President Sin-Hyuk Han. “We dream of becoming a major player in the semiconductor industry. We expect to be in the top tier of foundries and have revenues of $10 billion a year by 2015.”

Dongbu got its fab in Eumsung, outside of Seoul, up and running fast by a copy-exact strategy using technology licensed from Toshiba, based on that company’s Oita fab in Japan. Toshiba invested $50 million in the company, and also gave Dongbu access to its cell library of analog, logic, and I/O functions. Close to $400 million more capital came from the Dongbu group, four Korean banks, and two international investment funds. Currently installed tools can do 0.18-micron production. For 0.13-micron the new foundry will need to buy another scanner, and copper tools to add copper processes. The company is also considering adding a packaging line as well to meet customer demand for one stop shopping, or may decide instead to partner with a nearby assembly house, such as Amkor or ChipPac.

The Eumsung fab uses open cassettes, not standard manufacturing interface technology. “Most foundries use SMIF, and we considered it as well,” said Executive VP and R&D Director Il-hyun Choi. “But SMIF adds more cost, and we were more familiar with the bay system, so we thought that could improve yield. We will continue to evaluate which is most cost effective and will evaluate both systems for Phase 2.”

“We tried to copy Toshiba exactly to make the process easier, but we also investigated what others in the industry were using for the lowest cost of ownership,” explained COO Wesley Min. “About 60% of the equipment is what Toshiba uses, about 40% we decided.” That means mostly Nikon steppers, but some from ASML, with inline metrology for lithography, using largely KLA tools. Dongbu also uses mostly TEL track systems, but some from SVG; mostly Applied Materials etchers, but some from TEL; mostly TEL diffusion furnaces, but some from SVG; implanters from Axcelis and VSEA; thin film tools from Applied and Novellus; CMP tools from Ebara. The overhead transport system comes from Shinko. Other units from Hitachi, Mattson, Steag, and Rudolph are scattered through the fab. Also seen on the floor was one tool from the Korean company Silicon Tech, known for its resist processing equipment. “Toshiba may use this later,” said Min.

Dongbu has only licensed Toshiba technology through 0.13-micron. “Beyond 0.13 we hope to develop our own technology, or partner with someone, instead of having to just buy it,” said Peter Hillen, executive VP of worldwide marketing and sales, based in Mountain View, CA.

Hillen noted that there are few major competitors so far for the niche of second source to TSMC. UMC has its own different technology, Chartered has an IDM strategy, and while the other Korean companies have been trying to use some excess DRAM capacity for foundry production, they don’t really want to be in the business. Also helpful could be the Japanese consortium STARC’s recent decision to make all its library designs TSMC-compatible, which may mean that most of the major Japanese companies plan to make their design rules TSMC-compatible. Toshiba will also consign some production to Dongbu, and the company has high hopes for the developing Korean fabless chip sector, now said to number 100 design shops. “I don’t believe that, but at least there are tens,” said Hillen. The Korean government is encouraging the sector by offering offices with subsidized rent, encouraging venture capital, easing access to the stock market, and paying half the cost of prototyping for these companies. Dongbu recently initiated a shuttle service where small companies can share a prototype wafer to make just a few sample chips.

The Korean foundry should be able to match prices from Taiwan. “Overall production costs are about the same in Taiwan and Korea,” said Masahiko Ishino, senior analyst at Tokyo-Mitsubishi Securities. “Though in Taiwan people have more incentive because they get stock bonuses.”

Dongbu said 43% of its 650 employees have at least five years experience in the semiconductor industry. Of the most senior technical executives, COO Min and R&D’s Choi got Ph.D.’s in the US, then worked at Hynix. Min also spent seven years at Intel. But President Han, VP Kyung Jin Choi, and top finance executives come from Dongbu’s construction and steel businesses.


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