Macronix Annual Report 2003

As a result of the aforementioned innovations in organizational structure, the General Manager and two senior vice presidents are able to even more actively communicate with each other and work towards the integration of Macronix's considerable resources. From the standpoint of its internal integration, Macronix's two business groups can engage in dynamic partnerships in cross-group technology and manufacturing capabilities. Under the guidance of the Technology/Manufacturing roadmap, the two business groups can work synergistically to respond swiftly to market needs and increase the overall scope of sales.

Aside from steady, ongoing cooperative relationships with its Key Accounts, Macronix continues to actively court new clients to increase the breadth of its sales sources. This has been a healthy development. From 2002 to 2003, growth in new clients meant that revenue dependence on existing key clients was reduced from 53.73% to 47.53%. Macronix's attentive cultivation of its already excellent relationships with its key clients, as well as the development of new clients, has meant a steady growth in sales activity and revenue.

Macronix has experienced great success in its process technology transition. Starting from the fourth quarter of 2003, Macronix began the shift from 0.25µm and 0.18µm towards 0.15µm processes. In that quarter, mass production of 0.15µm commenced, and a wafer test yield of 72% was achieved. Advanced capacity utilization of 0.18µm and 0.15µm reached full capacity in the fourth quarter, and Macronix estimates that 2004 will see a full conversion to 0.15µm technology.

Moreover, N-Bit technology-enabled products using the 0.25µm process have begun to enter mass production. In 2004, 0.15µm N-Bit mass production will also commence. This increased advance process ratio should result in significant and visible growth in capacity utilization and product gross profit for 2004.

Aside from continuing the development of high value-added Application Specific Memory (ASM), where Macronix has already achieved global leadership in Mask ROM, Macronix continues to make strides in Flash memory, a market with seemingly unlimited potential. In 2003, Macronix's Flash net revenue grew 33% and shipping volume grew 60% compared to figures from the previous year. Macronix will continue to work towards steady revenue growth, making progress in net revenues and shipping capacity to expand its market share in the Flash market.