Oliver Cromwell was hanged and decapitated two years after he had died
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Taiwanese government mulls DRAM bailout plan
THE TAIWANESE GOVERNMENT is debating whether or not to bail out dynamic random access memory (DRAM) chipmakers, with the threat of their collapse threatening the whole country’s economy.
Powerchip Semiconductor, Nanya Technology, Inotera Memories and ProMOS Technologies, the big four DRAM makers in the Taiwanese market, managed to collectively post losses of some $1.1 billion in Q3 this year, adding to the $2.7 billion in losses accumulated through the first half of 2008. This makes the DRAM sector the biggest tech loser of them all in Taiwan, and the country is feeling the pain.
Things are not likely to improve much either, with weak market demand prompting analysts to predict overall combined losses from the big four to reach $3.4 billion by the end of the year.
What makes the situation particularly sticky is that the firms have apparently borrowed about $12.7 billion between them from local Taiwanese banks as well as a fair few overseas convertible bond payments due to be paid up by next year. Now, with the credit crunch causing banks to hang on to their every penny and refusing to lend, the chipmakers are in a bit of a pickle, unable to borrow their way out of debt or pay off their bonds.
This means several of them are more than likely to fold before the market even gets a chance to recover.
But the Taiwanese are terrified that if the government doesn’t come up with a bail-out plan, and fast, it won’t just be the DRAM industry which might collapse; A domino knock on effect would probably occur, toppling Taiwan’s national banks and bringing the rest of the tech industry down with it, starting with LCD flat-panel display tech.
On the other hand, some Taiwanese are arguing that bailouts might just make the situation worse, throwing money into a black hole with no real light showing at the end of the tunnel. This argument follows through that if some firms were allowed to fail, though the consequences might be a bitter pill to swallow now, in the future, those company’s which pulled through would be stronger for it and the industry as a whole might regain some of its competitive edge.
While the Taiwanese government mulls it all over, however, DRAM firms will definitely have to start thinking about massive shifts in company strategy, restructuring and, no doubt, lay-offs. Then it remains to be seen whether cash injections of public funds, emergency bailout loans and re-adjustment of payment terms can stop the industry, and a massive sector of Taiwan’s economy, from going under. µ
L'Inq
Taipei Times
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Stewart,
You are misunderstanding several key points. For example, in your point #1 you equate sales with profit. No, that's gross income. Profit takes into account costs.

They have to build the FAB first, before they can make any DRAMs. That can cost Billions, which must be financed, which means interest and payments. 

If the FAB sits unused, they don't make zero -- they lose huge. It then makes sense to produce DRAMs even at a loss, because it produces cash flow allowing them to make their payments, and the loss is less than the cost of sitting idle. 

In other words, production makes them money -- just not enough to cover their (already expended) capital costs + interest.


You are obviously not well informed about how these markets and costs work.

Just because they don't produce chips doesn't mean they aren't having to maintain their equipment, paying their employees, etc. Also, selling chips for less money is much better than not selling chips for no money, since they have these fixed costs to cover either way. That's how they post billions in losses.
Instead of a bailout they could just pass a law that says companies are not allowed to pay debt for 2 years, same effect.

Now having said that, and so having put it in another light, think once more about what a bailout means and accomplishes.
If you were successful you should now be at the point were you say 'we need some sort of international solution' :)

I myself am pretty confident the crisis is caused by bush feeding the greed of the fat cats until their brains overloaded, so perhaps the only real solution is medicating the big players (I mean actual medication for the actual people, CEO and such, this was not meant symbolic).
Just watch them on business newsshows to see what I mean.
this is not making any sense at all. 
how can companies all of a sudden post millions if not billions in losses. 
1.you sell products or you dont, this is called profit and loss 

2.if your not selling then dont make, this is called taking preventitive measures 

3.you lay off your workers if they are not needed.

so which or all of this did they not follow because either they made alot of ram, and its still sitting at their factory, or they didnt make any, which would mean there is no money spent, so why the big losses? ohh thats right OIL. I think the equivelent SEC should look into this as this sounds very fishy to me, the computer world has been pretty much isolated by all this economic fallout, I mean there has been some lay offs etc, but noone is posting losses like this, and thats because you are full of shit. 
I want to know where their money went. unless they were investing it in the US housing market, then they should have a nice fat bank account. I think someone is in alot of trouble here