Tuesday, August 11, 2009

Buying Qimonda's China Assets

According to Taiwan's China Times newspaper(link), the Shandong-based Langchao Group will buy Qimonda's R&D facility in Xi'an and the Huarun Group will buy Qimonda's assembly and testing plant in Suzhou. The Taiwanese newspaper sees this as a strategic move for China to occupy upstream and downstream memory technologies and complete the DRAM production chain in China if one includes Korean Hynix's fab in Wuxi. There are several problems with this analysis. First, who cares about completing the production chain within one country. The critical segment of memory, the fabrication--which itself is hard to separate cleanly from the design in these memory products, is still in Korean hands. Second, it is really unclear what use the R&D facility in Xi'an will be to Langchao. Can this group of engineers in Xi'an create a manufacturing-ready cutting edge DRAM design? Probably not. And even if they could, would Langchao be able to do anything with it?

Perhaps Langchao's move is related to the rumors of the Shandong provincial government's own plans to build an IDM or pureplay foundry in the provincial capital of Jinan (see my very unromantic February 14 post). Combining this R&D facility with an actual fab makes the most sense in terms of utilizing a memory design R&D facility, but entering the memory business at this stage seems foolish from both a public policy and commercial perspective. Unfortunately, that may not stop Shandong and Langchao from investing.

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