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Date: 06/22/99

Spokesman: Robert Hsieh
News Number: 99106

VIS, Mitsubishi and PSC to Form a Strategic Alliance and Establish Technology and Capacity Collaboration among Three Companies


Vanguard International Semiconductor Corp. (VIS), Powerchip Semiconductor Corp. (PSC), and Japan's Mitsubishi Electric Corp. (Mitsubishi) announced today that the three parties have signed a memorandum of understanding to establish a strategic alliance which encompasses a broad-based collaboration in DRAM technology, manufacturing and capacity among the three companies. Through this strategic alliance, VIS and PSC will acquire a leading-edge 0.18m DRAM process technology as well as the 64Mb and 128Mb product design from Mitsubishi.  By purchasing an 11% stake in PSC from Mitsubishi,  Kanematsu and other shareholders for NT 2.7 billion, or NT$ 17.5 per share, VIS will take 2 seats in PSC's board of directors and one Supervisor's position. Dr. Frank Huang will continue as the Chairman of PSC, while Mitsubishi stays as a major shareholder with its remaining shares.

"The strategic alliance with Mitsubishi and PSC will benefit VIS significantly." said Dr. Morris Chang, Chairman of VIS.  Since its establishment, VIS has built up its own capability in technology and product development, as well as extensive global sales and marketing channels.  Through this alliance, VIS will gain access to Mitsubishi's leading-edge 0.18gm process technology and the 64/128Mb product design, thus accelerating the development of its future generation processes ( 0.15gm and beyond) and products (256Mb and beyond), and enabling its ascension to the world-class DRAM manufacturer. Dr. Morris Chang also noted, "With the 0.18gm technology, Vanguard's design team and its partner will be able to design high speed (Rambus/DDR) and graphic DRAM products in the near future, and enhance our competitiveness and increase our market share."  The cooperation between PSC and VIS will further strengthen the already excellent manufacturing capabilities of the two companies and lower the manufacturing cost through the economy of scale. Leveraging one another's technical expertise and resources, all three parties will definitely enhance their competitiveness in the areas of manufacturing capability, technology development and worldwide markets, creating a "win-win-win" situation.

Dr. Frank Huang, Chairman of PSC, noted, "In light of this alliance, Mitsubishi will expand the scope of its original technology transfer to provide 0.2 and 0.18gm technology to both PSC and VIS.  PSC and VIS can develop the next generation of 0.15gm process technology by ourselves or with the cooperation of Mitsubishi, ensuring and strengthening PSC' s leading position in the advanced process technology "  As for capacity, PSC and VIS can complement each other to enhance both companies' production flexibility. "From the very beginning, PSC has kept on transferring the state-of-the art technology from Mitsubishi and has emerged as an outstanding DRAM company." Dr. Huang continued, "With the strategic alliance with VIS, PSC will also enhance the partnership with Mitsubishi, thus enabling PSC/VIS/Mitsubishi a world-class position in the DRAM industry."

"PSC has long been a vital production base of 64Mb DRAMs for Mitsubishi," said Hiroshi Kameda, senior executive vice president of Mitsubishi.  "This three-way alliance will form a strong partnership between Mitsubishi and PSC/VIS in the manufacturing and development of DRAM technology, making Mitsubishi/PSC/VIS become more competitive in the long run.  Based on its existing cooperation framework, Mitsubishi will further enhance the partnership with PSC in a mutually beneficial way.  Through the alliance with PSC and VIS, Mitsubishi will increase its production capacity in Taiwan so as to maintain its lead in DRAM market and to continue its development of more advanced technology.  In the long term, it can create the dialogue between Mitsubishi and TSMC regarding the opportunity of the product foundry and technology cooperation."


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