Taiwan DRAM vendors face tough 2011

Taiwan's DRAM makers survived the last downturn. This time around, the island's vendors may run out of luck.

Taiwan's Nanya Technology Corp. will survive, because that it has a parent with deep pockets. But still, Nanya continues to lose money.

Powerchip Semiconductor Corp. and ProMOS Technologies Inc. are simply in trouble. Both vendors lack the capital and technology to keep up

with their rivals in South Korea.

The signs are bad for Powerchip. For example, DRAM maker Rexchip Electronics Corp. has suspended product shipments to Powerchip,

because it can't pay its bills and is strapped for cash, according to Bloomberg.

Taiwan-based Rexchip was established in 2006, as a 300mm DRAM manufacturing joint venture between Taiwan's Powerchip and Japan's

Elpida Memory Inc. At one time, Rexchip was a 50:50 venture between the firms.

In recent times, Elpida gained control of Rexchip. Elpida has a 69 percent stake in Rexchip. Still, Powerchip gets 31 percent of the output at

Rexchip.

Rumors have re-surfaced that Elpida may buy Powerchip and ProMOS. An attempt to weld several small Taiwanese DRAM makers together

into a single entity using government money fell apart earlier this year. Taiwan Innovation Memory Co., having been rejected as a suitable case

for government investment as a DRAM company, is trying to reinvent itself as a NAND flash supplier.

This has left Powerchip, ProMOS. and Winbond Electronics Corp. as being essentially too small to keep up in the capital intensive DRAM

business and among possible targets for Elpida.

Elpida is looking to buy stakes of 20 percent to 30 percent and deals may lead to takeovers, although no negotiations are under way, according

to reports.

- Mark LaPedus
EE Times