Taiwan to Set up Firm to Consolidate DRAM Chip Industry

Taiwan's government announced on March 5 plans to set up a firm to consolidate the island's ailing memory-chip industry which has been struggling with record losses as the global downturn hits demand. Industry expert John Hsuan, honorary vice chairman of Taiwan's United Microelectronics Corp, will head up the firm called Taiwan Memory Co., the economic ministry said.

Government investment would not exceed a 50% stake in the company, which may partner with either Japan's Elpida Memory Inc. or U.S. semiconductor company Micron Technology Inc., the ministry said. Both have expressed interest in Taipei's plans to consolidate the industry and already have joint ventures with local firms.

Elpida, the world's third largest maker of DRAM chips used in mobile phones and home electronics, has a joint venture with Powerchip Semiconductor Corp. and Micron with Nanya Technology Corp.

The new company will be tasked with securing badly-needed core technologies and consolidating the local industry to upgrade the island's competitiveness in the DRAM (dynamic random access memory) chip market, the industry said.

Details of the new firm have not been finalized, but the ministry said it would not rule out mergers of Taiwan's six DRAM manufacturers, which have posted huge losses and turned to the government for assistance.

In the nine months to September, the island's four leading DRAM makers jointly booked a record net loss of more than 90 billion Taiwan dollars (US$2.6 billion), with a full-year loss surging to 120 billion Taiwan dollars. Taiwanese authorities have said they want to aid the industry but not individual firms, which critics say are uncompetitive and too reliant on overseas companies to supply crucial advanced core technology.

Unlike their bigger competitors Samsung Electronics, Hynix Semiconductor, Elpida and Micron Technology, which also produce the higher-priced NAND flash memories and mobile telecommunication memories, Taiwanese DRAM makers have been focusing on low-priced commodity DRAMs for computers.