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Elpida ends partnership with Powerchip

Posted: 03 Jul 2009 ?? ?Print Version ?Bookmark and Share

Keywords:DRAM? Elpida-Powerchip deal? joint venture?

Japanese DRAM maker Elpida Memory Inc. is withdrawing from Powerchip Semiconductor Corp.'s board, gradually walking away from their partnership. That's more trouble for Taiwan DRAM maker Powerchip, which continues to spill red ink and lose share amid the memory downturn.

Simply put, Powerchip is battling for its survival. Some believe it could collapse at any time.

Powerchip was founded in 1994. In 2007, Elpida and Powerchip signed an agreement to establish a DRAM joint venture in Taiwan, dubbed Rexchip Electronics Corp. The companies built fabs in Taiwan.

Last year, Elpida decided to acquire a portion of the shares its strategic partner Powerchip owns in Rexchip. Elpida took a 52 percent stake in Rexchip, up from 48 percent, taking control of Rexchip.

At the time, Powerchip was struggling. "While Elpida has the utmost respect for (Powerchip) as a partner in the Rexchip joint venture it believes Rexchip can achieve faster business decision-making capabilities by becoming an Elpida subsidiary," according to Elpida at the time.

Due to the downturn, Powerchip's sales were down 85 percent compared to Q1 08.

The government of Taiwan has explored various plans to merge the Taiwanese memory vendors, forming a government-backed venture, Taiwan Memory Corp.

Powerchip is part of the mix. But thus far, Taiwan Memory is unable to get off the ground.

Elpida has its own problems. The Japan government pledged $1.7 billion in the company amid vast losses of directors, the current relationship remains the same.

"The relationship between both companies' remains strong and the working relationship has not changed. Elpida and Powerchip will continue with its collaboration." said Yukio Sakamoto, president and CEO of Elpida.

- Mark LaPedus
EE Times





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