Taiwan considers helping DRAM makers

THE TAIWANESE government may not be willing to sign a blank bail-out cheque to its floundering memory makers, but it has said it will consider buying up company stakes and offering loans, a move which boosted plummeting DRAM stocks by over six per cent.

Chen Chao-yih, director-general of the Industrial Development Bureau and a member of the Taiwanese government's special 'Save DRAM' task force, noted "We will not rule out [extending financial support] in the form of loans or buying stakes via a government fund".

But before the DRAM companies could start 'whoop-whooping' and cracking open the champagne, Chen warned it would be unlikely, however, "that the government would inject fresh capital into local DRAM companies".

The Taiwanese government is probably wise to exercise caution. After all, in the third quarter of this year alone, the country's three biggest chipmakers - Powerchip, Nanya Tech and Promos - collectively posted losses of NT$32.58 billion ($974 million). And this is after almost two horrible years where the memory industry has suffered from a deadly supply glut and sagging demand, driving prices down the toilet. The industry suffered another 40 per cent slump this year after an 85 per cent decline last year.

Many in Taiwan feel DRAM should be left to fight it out in 'survival of the fittest' competition, with many analysts claiming there are too many DRAM companies in the market. Instead of supporting a government bail-out, some think the industry just needs to tighten its belt and consolidate.

Worst hit is probably Promos, the first Taiwanese memory chip maker to ask the government for a bailout.

In a filing to the stock exchange yesterday, Promos noted that it would keep an open mind about any government suggestions whilst dismissing speculation that it plans to sever its long-term partnership with South Korea's Hynix Semiconductor in favour of Japan's Elpida Memory.

The denial came as the Chinese-language Commercial Times newspaper suggested Promos was being forced by the Taiwanese government to choose between US DRAM company Micron and Elpida, which are also the respective technology partners of local DRAM makers Nanya Tech and Powerchip Semiconductor.

Chen reinforced Promos's denial of the allegations, noting "The government hopes local firms will enhance their competitiveness because of the industry shakeup. However, we did not force them to take sides. We respect the market mechanism." µ

L'Inq
Taipei Times

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