Production on the first batch of 300-millimeter wafers is slated for the end of 2003, with a capacity of 20,000 wafers expected by the second half of 2004, Infineon said in a statement.
In addition, both companies plan to co-develop advanced 0.09-micron and 0.07-micron production technologies for 300mm wafers beginning this October, Infineon said.
The value of the deal was not disclosed. The name of joint venture will be released at a later date, according to Infineon Asia-Pacific spokeswoman Kaye Lim.
"With this announcement, we are strengthening our position in Asia and increasing our share in the worldwide market for memory chips," said Ulrich Schumacher, Infineon's president and CEO.
Infineon's technology is widely used and licensed in Taiwan. The company has a joint venture with Taiwan's Mosel Vitelic, called ProMos Technologies, that produces 128M-bit and 256M-bit SDRAM (synchronous DRAM) and DDR SDRAM (double data rate SDRAM) chips.
Munich-based Infineon also licenses its DRAM manufacturing technology to Winbond Electronics in Hsinchu, Taiwan.
Schumacher previously said that demand for DRAM chips is getting stronger, a sign that the market is recovering.
CNETAsia's Fran Foo reported from Singapore. Additional reporting by Evan Chang in Taipei.