Chartered to acquire eight-inch wafer fab operation in Singapore

Mumbai: Top dedicated semiconductor foundry Chartered Semiconductor Manufacturing Ltd.,  today announced its deal with Hitachi Ltd and Hitachi Asia, Ltd to purchase 100-per cent of the shares in Hitachi Semiconductor Singapore Pte Ltd (HNS), which owns and operates an eight-inch wafer fabrication facility located in Singapore, for approximately $233 million in cash.

This additional facility will augment the capacity of four eight-inch fabs Chartered currently operates. The incremental capacity from this acquisition will enable Chartered to meet some of the additional requirements of existing customers, capture new business opportunities and further  diversify its customer base.

The transaction also includes a manufacturing agreement with Renesas Technology Corp, an existing customer of HNS, to provide approximately $250 million to $300 million worth of future wafer fabrication services. The transaction, which is scheduled to be completed at the end of first quarter 2008, is expected to be funded through a combination of existing cash balance, cash flow from operations and credit facilities and is subject to certain customary closing conditions.

The transaction is expected to be neutral to Chartered's earnings in 2008.

The facility is located on a 90,000 square-meter campus with building space of 28,000 square meters, including approximately 12,000 square meters of clean-room space. The bulk CMOS logic wafer fabrication facility is currently capable of producing approximately 24,000 eight-inch wafers per month at the 0.15-micron to 0.25-micron technology nodes. Based on the purchase consideration, the investment translates to approximately $7.0 million per 1,000 wafers output per month capacity, after excluding the carrying value of the building and other current assets and liabilities acquired as part of this transaction.

"Chartered remains committed to providing a full suite of foundry services to customers, enabling them to deliver market-leading solutions not only in advanced technologies but also in mature technologies.

This announcement reflects the progress we have made so far with our value-added technology offerings and allows us to capitalize the investments we have already made in that area by adding immediately available capacity near our existing campus with a trained employee base of approximately 800 people," said Chia Song Hwee, president & CEO of Chartered.

Chartered's 2008 cash-flow based capital expenditures are now expected to be US$590 million, $40 million lower than what was communicated earlier, primarily due to lower capital expenditure requirements in existing eight-inch fabs, as a result of this acquisition. This figure does not include the cost of the acquisition.