Infineon Expands in China

MUNICH and SUZHOU, China -- Infineon Technologies AG (FSE/NYSE: IFX) and the China-Singapore Suzhou Industrial Park Venture Co. (CSVC), Ltd, Suzhou, China, are setting up a joint venture for the assembly and testing of memory ICs (backend). The agreement provides for the construction of a joint facility in the Suzhou Industrial Park (SIP), 80 km to the west of Shanghai. Once completed, the facility will have a maximum capacity of up to one billion chips a year. The new company will operate under the name Infineon Technologies Suzhou Co., Ltd. Infineon holds 72.5 percent of the shares of the joint venture and CSVC the remainder 27.5 percent.

The new facility will be developed in a number of stages as dictated by growth and trends in the global semiconductor market. Total planned investment in the project over the next ten years amounts to around US$ 1 billion with the registered capital being US$ 333 million. Infineon will contribute US$ 241,4 million over the next five years as equity. CSVC will contribute US$ 91,6 million. The initial tranches are sufficient to ensure completion of the first stages of development including construction of the building, facilities, infrastructure and the first cost-intensive equipment. Any further investment would be mostly required for additional equipment. It is expected that the joint venture will finance this externally. When operating at full capacity Infineon Suzhou will employ over 1,000 people.

"With this partnership we are systematically expanding our presence in the future market of China, we will gain access to new customers, and aim to capture a 40 percent share of the market for memory products in China," said Infineon President and CEO Dr. Ulrich Schumacher. "Overall, we intend to secure in China a place among the top four in the microelectronics business with a market share of more than 10 percent within the next five years. By then we will have about 3,300 employees in China."

The formation of the joint venture expands Infineon's portfolio of high volume sites for memory product backends, chiefly Porto/Portugal and Malacca/Malaysia. The continuous growth in frontend capacities (introduction of 300 mm technology, cooperation ventures with Winbond, SMIC and Nanya) necessarily entails an expansion of capacity for backend production.

Work on constructing the new facility is scheduled to begin in October 2003 and the site should be ready for the equipment installation by mid-2004. Volume production is slated to commence in early 2005. The joint venture company will start by producing 256 Mbit devices in BGA packages. The wafers for further processing will come primarily from the collaborative projects with SMIC (Shanghai, China), Winbond and Nanya (both in Taiwan), but shipments from Dresden, Germany, and Richmond, USA, are also planned.

Infineon Technologies AG