Hsin-Chu, Taiwan, September 29, 1998- Royal Philips Electronics of the Netherlands (AEX: PHI, NYSE: PHG), Taiwan Semiconductor Manufacturing Company (TSMC)(NYSE: TSM) and EDB Investments of Singapore announced today that they are to form a joint venture to build a new wafer fabrication facility in Singapore's Pasir Ris Wafer Fab Park. The new facility will demand an investment of about 1.2 billion US dollars. Construction will start in early 1999, with production commencing in the second half of the year 2000, reaching full production capacity in 2003. The facility will produce chips with feature sizes of 0.25 micron, 0.18 micron and beyond.
Philips will be the largest shareholder in this venture with 48 percent of the shares. TSMC will hold 32 percent of the shares, and the companies will be able to call on respectively 60 percent and 40 percent of the production capacity. EDB Investments will hold the remaining 20 percent of the shares. The Board of Directors of the joint venture company will be composed of executives from each of the partners. The partnership between two leading semiconductor companies and EDB Investments will provide for a solid financial backing for this state-of-the-art wafer fabrication facility and will accelerate the ramp-up to full production.
Philips, Europe's leading semiconductor supplier, and TSMC, the world's largest IC foundry, have had a mutually beneficial relationship since 1987. Philips was one of the major founding shareholders of TSMC and currently owns 27.6% of TSMC shares. Philips is also a major customer of TSMC which has been manufacturing Philips' products by using a wide range of state-of-the-art technologies. This new joint venture will further strengthen the already strong partnership between the two companies.
"Our relationship with TSMC has been built over many years, so we know that the technology, manufacturing and customer service expertise of the two companies will make a formidable combination supported by the government of Singapore," said Arthur van der Poel, Chairman and Chief Executive Officer of Philips Semiconductors. "Timing is critical with a major investment like this. Philips focuses on systems on silicon for consumer and communication applications - a relatively solid sector even today when the market for commodity products is suffering from over-capacity. Our projections show that by the time this new facility comes on stream late in the year 2000, the market for logic chips will be strong. This joint venture is a carefully thought-out, long-term investment in the future of Philips Semiconductors, one of the key profit centres of the Philips Group."
"Philips Semiconductors has been our long-term partner and customer for many years. We're pleased to be building on our already strong relationship with Philips Semiconductors to provide access to advanced technology in yet another fabrication facility," commented Dr. Morris Chang, Chairman of TSMC. "TSMC is the first and only foundry to dedicate several unique sites around the globe as sources assuring our customers' product supply. We now have five fabs on our Northern Taiwan site, one in Camas, Washington, and another underway in the Tainan county in Southern Taiwan. This new joint venture fab in Singapore is another example of our commitment to operate as a second source within one company and is consistent with our long-term capacity expansion strategy," he explained.
Philip Yeo, Chairman of the Singapore Economic Development Board commented: "I am very pleased with the announcement of this new joint venture between two leading semiconductor companies, Philips Semiconductors and Taiwan Semiconductor Manufacturing Company, together with EDB Investments. This significant investment re-affirms Singapore's competitiveness for such long-term capital-intensive projects. This wafer fabrication