Chartered buys Hitachi 200mm fab, gains Renesas’ biz

Feb. 15, 2008 – Facing limits in its ability to expand internal capacity, Singapore’s Chartered Semiconductor Manufacturing has bought 100% ownership of Hitachi’s Singapore unit, Hitachi Semiconductor Singapore Pte Ltd (HNS), including a local 200mm fab near its existing campus, for ~$233M in cash.

The deal also includes a manufacturing agreement with HNS customer Renesas Technology to provide ~$250-$300M worth of future wafer fab services. Hitachi noted in a statement that HNS will continue to make semiconductor products for Renesas.

The “incremental” capacity gained with the new 200mm fab — added to Chartered’s four existing 200mm facilities — will help meet customers’ increasing requirements, add new business, and diversify its customer base, the company said in a statement. The transaction, to be funded through a combination of existing cash, cash flow from operations, and credit facilities, is expected to be completed at the end of 1Q08, and be neutral to the company’s 2008 earnings.

Stats about the newly purchased facility: it’s a 90,000 sq. m campus, with 28.000 sq. m of building space, ~12,000 of that in cleanroom space. Bulk CMOS logic production capacity (0.25μm-0.15μm) is currently ~24,000 wafers/month. Chartered calculated the deal translates into ~$7M/1k WPM. Along with the facility, Chartered also will bring on about 800 workers.

HNS was established in July 1996 as a production base for DRAM by Nippon Steel Corp., EDB Investments Pte. Ltd., Hitachi, and Hitachi Asia Ltd. (Nippon and EDB were bought out in 2003-2004), but has been shifting focus away from the soft DRAM market into logic devices, including LCD drivers and microcontrollers for Renesas, Hitachi noted. HSN sales totaled about $231K in FY06, 64.5K operating income (~28% margin), 53.5K net income (~23%% margin), and about $229K in total assets.

The deal also will reduce Chartered’s planned cash flow-based capex in 2008 for 200mm facilities, by about $40M to $590M.


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