Date: 1st Feb 2011

Powerchip to become 100% semiconductor foundry service provider

Taiwan based Powerchip Technology Corporation has announced its plans to shift towards a semiconductor foundry model by expanding its foundry production portion to Elpida as well as other semiconductor ICs and customers.

This is due to the ongoing agreement between Elpida Memory, Inc. and Powerchip. Elpida and Powerchip have reached a non-binding understanding that Elpida will purchase all DRAM products that Powerchip will manufacture, including the current portion which Powerchip has been selling as Powerchip branded products. Elpida will sell those products as Elpida's house brand products. Further consultations between both companies will be held to reach an early final agreement.

Elpida is already purchasing half of what Powerchip manufactures at their semiconductor fabs in Hsinchu, Taiwan. Powerchip currently has 80,000 silicon wafers per month capacity for commodity DRAM production and licenses from Elpida the right to distribute the other half of the products as their own branded products. Powerchip also has a right to purchase approximately 30,000 DRAM wafers fabricated at Rexchip Electronics Corporation, a joint venture between the two companies, and sell those DRAMs to their customers as their own branded products.

As per final agreement Powerchip will phase out the sales of own branded DRAMs and Elpida will purchase all PC DRAMs from Powerchip to sell them as its own branded products.