January 2, 2007 – Conflicting reports suggest that Taiwan’s Vanguard International Semiconductor Co. is about to buy Powerchip’s only 200mm wafer fab to add badly needed foundry capacity, according to the Taiwan Economic News, although another report says the companies are still weighing their options.

The Taiwan Economic News claims the proposed $242 million deal could be completed within the next month, although it’s unclear if Vanguard will take over the entire fab in the Hsinchu Science Park or just purchase the tools. Powerchip’s Fab 8A began mass production in 4Q06, with maximum capacity of 40,000 wafers/month capable of 0.25-0.15 process technologies.

The Taiwan paper noted that Vanguard is eager to add facilities to alleviate a capacity crunch. The company has received government approval to build a new factory in the Hsinchu park, but the project is still in the early stages of land appropriation, and will take at least another year to complete.

Powerchip claims such a deal is “pure speculation,” although the two companies are already partnering to share capacities, according to a Forbes report. The company also indicated it has other options for the facility, including transferring the entire operation to China.

Also, Vanguard’s largest shareholder, TSMC, may influence the sale, the Taiwan paper noted. Powerchip recently received government approval to transfer 200mm/0.18-micron process technologies over to China to set up operations, where TSMC has already been operating its own 200mm site.