Inotera Memories is reportedly experiencing yield difficulties in back-end processes for 12-inch wafers and has produced 20,000-30,000 wafers of defective chips. Inotera transitioned from 70nm trench process to 50nm stack process in 2010 but the switch has not been as successful as the company had hoped, according to industry sources.

Inotera indicated that the significance of the defects is exaggerated and the yield issue has since be corrected and will not affect shipments to clients. Inotera, on February 21, said that first-quarter bit growth will remain at 40% compared with 40-50% projected earlier. Inotera's transition to 42nm process will not be affected, the company said.

Inotera is a DRAM joint venture between Nanya Technology and Micron Technology. The company's 12-inch fab has a monthly capacity of 130,000 wafers split down the middle between its two investors. Though Inotera's first-quarter bit growth will stay at 40%, Nanya will likely cut its bit growth target to less than 30%.

Inotera reportedly will repair the defective chips and distribute via Nanya over the spot market, the sources said. Nanya indicated that it is indeed planning to raise the sales proportion of the spot market from 30% to 40% but it is due to better pricing in the spot market versus contract supply agreements. The spot market has always represented 30-40% of the Nanya's sales, and hence the percentage increase is in line with its overall strategy, the company added.