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Can Taiwan DRAM vendors stay independent?

Posted: 29 Jul 2009 ?? ?Print Version ?Bookmark and Share

Keywords:Taiwan DRAM? DRAM? memory?

Taiwan's DRAM industry is scrambling to find new ways to survive amid the horrific memory downturn.

The island's government has stepped in to help the industry. Intel Corp. is reportedly mulling plans to invest in one Taiwan DRAM venture. Another Taiwan DRAM maker has severed its alliance with South Korea's Hynix Semiconductor Inc. And even one IC-packaging house has entered the bail-out picture.

But clearly, Taiwan's DRAM makers are still in limbo. For some time, they have lost vast sums of money and share. And there's no relief in sight.

As part of its plan to bail-out Taiwan's loss ridden DRAM sector, the Taiwan government proposed consolidating all of the island's DRAM makers into a single company. Thus far, the DRAM vendors have refusedlocal suppliers want to remain independent.

That, however, is "no longer an option," warned Andrew Norwood, an analyst with Gartner Inc., in an e-mail newsletter.

According to Gartner, Taiwan's DRAM industry made the following headlines last week:

??"The Taiwanese government announced that it had allocated just under $1 billion in funds for local DRAM manufacturers that were developing technology with foreign firms as well as perusing mergers and acquisitions."

??"Taiwan's ProMOS Technologies announced that it was ending its technology for capacity agreement with Hynix, opening up the way for ProMOS to restructure itself and work with other vendors." (ProMOS was making DRAM based on Hynix' process.)

??"Rumors circulated that Inotera was looking for funding from Intel and that Formosa (which has stakes in Inotera and Nanya) was interested in Winbond Electronics."

??According to Digitimes, there was another rumor in the arena: Advanced Engineering Semiconductor Inc. has approved a NT$450 million ($13.7 million) loan to Taiwan DRAM maker Powerchip Semiconductor Corp.

What does it all mean?
"At the start of 2009, with vendors making unprecedented losses, it looked as if the Taiwanese industry was going to quickly consolidate under one umbrella company. Then, as DRAM pricing began to improve, vendors backed away from the 'big deal' solution in the hope of remaining independent," Norwood said.

The government of Taiwan recently explored various plans to merge the Taiwanese memory vendors, forming a government-backed venture, Taiwan Memory Corp. Japanese DRAM maker Elpida Memory Inc. is leading the group, but not all local companies want to cooperate.

"However, it is now clear that although the market is improving, it is only the vendors with advanced process technologies for DDR3 that will be able to enjoy sustained recovery," he said. "Thus, many vendors in Taiwan are again facing up to the fact that remaining independent is no longer an option if they cannot invest in the latest technology."

- Mark LaPedus
EE Times

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