Memory Factory's $1.73B Kaohsiung Expansion Plan

August 4t Reportedly, Winbond Electronics' board sanctioned a budget of 1.73 billion New Taiwan Dollars on August 3rd for capital expenses, aimed at expanding their manufacturing facility in Kaohsiung. These investments are set to commence gradually starting in August.

During their first-quarter earnings conference, Winbond Electronics' management revealed their projection of a 12.1 billion New Taiwan Dollars capital expenditure for 2023, marking a substantial 70.34% decrease from the previous year. The majority of these funds will be directed towards enhancing the Kaohsiung facility, focusing on process quality improvement and the development of new manufacturing processes.

Winbond Electronics has outlined plans to initiate mass production of 20nm products at their Kaohsiung Luju factory by the fourth quarter of 2023. They estimate that by the end of 2023 and into the first quarter of 2024, the monthly production capacity of the Kaohsiung facility will reach an impressive 14,000 wafers.

The company's primary focus at the Kaohsiung facility is on the production of 25nm products, with a focus on DDR3 2G and DDR3 4G memory products. Additionally, they are in the early stages of production and customer testing for new manufacturing processes such as 20nm DRAM and 45nm Nor Flash. This process, from chip fabrication and validation to revenue generation, is estimated to take between 4 to 6 months.

In early May of this year, Winbond Electronics' CEO, Chen Pei-Ming, noted that the PC industry's inventory adjustments had reached a favorable level, leading to a surge in rush orders for commercial PCs and consumer electronics. The company anticipates a bottoming-out in operations during the first quarter of 2023, with potential for improvement in the second quarter. Consequently, the Taichung plant's second-quarter capacity utilization rate is expected to increase by 10 percentage points compared to the first quarter, with a growth trend expected to follow.

Winbond Electronics disclosed a resurgence in demand in three major application segments: consumer electronics, television, and the Internet of Things (IoT). They are also experiencing strong orders in industrial control applications, with a significant influx of rush orders. The company expects these factors, coupled with increased quantities, to positively impact their revenue.

The overall memory market is currently in a recovery phase. According to recent research from TrendForce, a global market research firm, NAND Flash average prices are anticipated to continue declining by approximately 3% to 8% in the third quarter, with the potential for a turnaround in the fourth quarter. Similarly, the projected decline in DRAM prices for the third quarter is expected to moderate to around 0% to 5%.