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Will Taiwan DRAM venture push through?

Posted: 13 Mar 2009 ?? ?Print Version ?Bookmark and Share

Keywords:Taiwan DRAM venture? memory market? Taiwan bailout?

Is the proposed Taiwan memory venture already falling apart?

Nanya Technology Corp. has not committed to the proposed memory venture and is still evaluating the concept. Reports have surfaced that another vendor, Powerchip Semiconductor Corp., is unhappy with the government proposal and will merge its operations with Elpida Memory Inc.

The Taiwan government also appears to be changing its tune about the venture. As reported last week, the Taiwan government said it would consolidate all of its DRAM makers and form a new company, dubbed Taiwan Memory Co. Taiwan's DRAM makers include Nanya, Inotera, Powerchip, Rexchip, ProMOS and Winbond.

The Taiwan government will pour $2 billion in the venture, but it will own less than 50 percent of Taiwan Memory, according to reports. The entity will form a partnership with "either" Elpida or Micron, reports said.

Difficult feat
Now, after just a week, there could be a slight change in plan. The Taiwan government has ruled out a "state-led merger" of the island's DRAM makers, according to Bloomberg. Instead, the venture "will focus on obtaining technologies and then look for existing plants in Taiwan for manufacturing needs," according to the report, which cited Economic Affairs Minister Yiin Chii-ming as its source.

It's hard to believe that Taiwan's DRAM makers will cooperate with this or any other government plan. In fact, they will most likely dismiss any government proposal.

"I would not be surprised if (Taiwan Memory) falls apart," said Jim Handy, an analyst with Objective Analysis.

It will be difficult for the Taiwan government to consolidate the island's memory players, compared to what Korea did several years ago. In 1998, the Korean government forced two memory makers, Hyundai (now Hynix Semiconductor Inc.) and LG Semicon, to merge. "That was a tough merger," Handy said.

"There is less government pressure in Taiwan," as compared to Korea, Handy said. "The Taiwan government cannot tell what the companies to do. But (if Taiwan Memory fails), then the question is where do Taiwan's DRAM makers go from there?"

Indeed, all DRAM makers, including those in Taiwan, are losing money. The Taiwan players may be forced to consolidateor get acquiredamid an ongoing downturn in DRAMs, he said. "It's a horrible business," he added.

Setting the record straight
Even before the new report surfaced about a change in strategy, the facts remain sparse about Taiwan Memory. In fact, there have been a slew of reports about the venture, many of them remain inaccurate.

For example, reports have surfaced that all Taiwan DRAM makers will join the new venture. Contrary to those reports, not every DRAM company on the island is on board with Taiwan Memory.

Each individual DRAM maker in Taiwan will separately decide whether to join Taiwan Memory or not, said Ken Hurley, president and CEO of Nanya's U.S. subsidiary.

So far, Nanya Technology has not joined the proposed Taiwan Memory venture. "We really don't know enough about the entity and whether we will join or not," Hurley told EE Times.

Right now, it's business as usual for Nanya. The company continues to make and sell DRAMs under its own logo. "Nothing has really changed for us," he said.

At present, Nanya is shipping 70nm DRAMs, based on the technology from its former partner, Qimonda AG. But Nanya is looking to convert its capacity over to a 50nm stacked-capacitor DRAM technology from its new partner, Micron.

As reported, Micron recently acquired Qimonda's share in a joint DRAM venture with Nanya in Taiwan, dubbed Inotera Memories Inc.

Like all DRAM makers, Nanya is waiting for the upturn. "It's pretty difficult now," Hurley said. The industry "will be treading water for awhile."

- Mark LaPedus
EE Times

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