Hitachi Cable has decided to expand its Takasago Works semiconductor plant (fab 2) in Hitachi City, Ibaraki Prefecture and to increase the production capacity in order to meet the rapidly increasing demand for compound semiconductor material.

Up to now our compound semiconductor business, mainly the GaAs-system, has been growing steadily, and annual sales in fiscal 2000 will reach 12.5 billion yen, which is a new record that will surpass the old record of 10billion yen set in fiscal 1999. This result is owing to the rapidly growing demand for semi-insulating GaAs substrates and epitaxial wafers used for microwave devices applied in mobile communication tools such as cellular phones and PHSs, as well as the demand for the wafers used for optical devices applied in light emitting diodes (LED) and laser diodes (LD).

We built the new factory in Takasago Works and commenced production in August 1999, and have increased the capacity so we can meet the increasing demand so far. However, the subsequent growth of demand has become larger than we predicted. This is mainly due to the fact we succeeded in the earlier development of large GaAs substrates (with 6 inch diameters) by the liquid encapsulated Czochralski (LEC) method and we supplied epitaxial wafers with high performance for high power amplifier transistors by the metal organic vapor phase epitaxial method (MOVPE), and these products have acquired a high reputation in both quality and supply.
Based on this background, we have decided to invest in both the further expansion of fab 2, (to start full-scale production in November 2000), and in equipment.

The needs for LEC semi-insulating substrates are changing, with the currently used 4-inch, moving to 6 inch. To meet this change, for the first time in Japan we newly completed a large volume production line for 6 inch wafers in December 1998. It contains all the new machines needed for processes from LEC growth and slicing to the final polishing, and we have subsequently been increasing the sales of 6-inch wafers, mainly to the American market.
When all plans have been finalized at the end of this year, the capacity of all 4 inch and 6 inch substrates will go up to 30,000 per month (4 inch vs. 6 inch is 70%: 30%) from the present 20,000 per month.
With regard to the technical aspects, we have been making efforts to continuously offer the highest quality to lead state-of-the-art technology, such as growing the world's longest 6-inch GaAs crystals with 350mm length and realizing high flatness of 6-inch wafers.

To meet growing demand, the capacity of MOVPE wafers will be doubled and go up to 16,000 per month (for 4 inch wafers) from the present 8,000 per month with the equipment we are currently investing in.
We have been and will be continue to actively increase capacity and development of new materials for microwave devices, such as the metal semiconductor field effect transistor (MES-FET), the pseudomorphic high electron mobility transistor (P-HEMT), the double hetero high electron mobility transistor (DH-HEMT) and additionally the hetero junction bipolar transistor (HBT) - thought to be a key device for the next generation.

Thus, we have been aggressively expanding our business as the global head in the field of GaAs-system compound semiconductor material. As a result we have gained a higher reputation and higher reliability. We will continue to expand our production capacity and to improve the quality so that we can meet all the market requirements.
We forecast that our annual sales will go up to 20 to 25 billion yen in a few years.

Investment

Plant: 2.2 billion yen for the expansion of fab 2
Equipment: 5 billion yen