Taipei, Feb. 9, 2010 (CENS)--Nanya Technology Corp. and Inotera Memory Inc. will retool their factories during the upcoming Chinese New Year so that they can start to crank out chips using 50-nanometer process and beyond immediately after the weeklong Chinese New Year holidays.

The two companies, both under the Formosa Plastics Group (FPG), have each acquired NT$3.5 billion (US$109 million at US$1:NT$32) worth of immersion lithography process equipment for the production.

Inotera plans to boost its output of 50nm chips to 130,000 wafers a month in the fourth quarter this year, up from current 100,000 to 110,000 wafers. Pilot production of 42nm chips will start in the middle of this year, one quarter earlier than scheduled. Volume production will begin in the fourth quarter, thereby paring down cost by 30% from production with 50nm process.

Inotera plans to spend NT$52 billion (US$1.6 billion) on output expansions throughout this year while Nanya plans capital expenditure for 2010 at NT$19-20 billion (US$593-625 million) and began raising the money last year.

The two DRAM chipmakers are on the camp led by Micron Technology of the United States, competing against the Elpida Memory-led DRAM camp, which comprises PowerChip Semiconductor Corp., Rexchip Electronics Corp. and Elpida itself.

Rexchip plans to spend around NT$12 billion (US$375 million) on 40nm process equipment to produce 2Gb DDR3 chips, an improvement from production of 1Gb chips.

Industry watchers estimate the capacity competition would unlikely lead to over capacity this year as the expansion paces are quite restrained.

(by Ken Liu)