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Japan-Taiwan DRAM courtship gets complicated

Posted: 09 Feb 2009     Print Version  Bookmark and Share

Keywords:DRAM  memory  merger  bailout 

The ongoing merger and consolidation negotiations between Japan's lone DRAM manufacturer, Elpida Memory, Inc., and its competitors in Taiwan are not deadlocked, but they're evidently growing more complicated. It is not only the survival of battered memory vendors at stake now, but also the national pride of both countries.

Dow Jones reported Feb. 5 that the Taiwan government is considering buying a stake in Japan's Elpida Memory Inc. as part of a plan to bolster Taiwan's memory chip sector.

The news agency's report quoted Chen Chao-Yih, director-general of Taiwan's Industrial Development Bureau, saying that "the government isn't ruling out the possibility [of buying shares in Elpida]...The plan requires agreement from both sides."

The Taiwan government reportedly aims to present a plan for the consolidation of Taiwan's DRAM industry in one month.

Meanwhile, an official at Japan's Ministry of Economy, Trade and Industry said, "If Elpida goes into a bankruptcy, that could harm Japan's entire electronics industry."

In a bid to shore up its capital, Elpida is exploring the Japanese government's bailout programme.

Lone Japan DRAM maker
The general sentiment among the business community here is that Japan's Ministry of Economy, Trade and Industry should expedite its creation of screening criteria for companies that will be eligible for an infusion of public funds. The fact that Elpida is the last DRAM manufacturer standing in Japan makes Elpida's application a likely shoo-in.

However, it isn't a done deal.

A bill approved by Japan's Cabinet Feb. 3 for troubled non-financial institutions to receive public funding still needs to be passed into law by the Japanese Diet.

Further, an unnamed executive at the Development Bank of Japan was quoted Feb. 5 in the Asahi newspaper as being "irked" by leaked news reports full of speculation about the proposed programme.

Under the proposed government bailout plan, Elpida, the first to emerge so far as a potential candidate, could receive funds in exchange for issuing preferred stock to the Development Bank of Japan (DBJ). In return, the DBJ is seeking the power to choose independently who is eligible for the funds.

Separately, a new debate is also brewing in Japan about the wisdom of using public funds to save failed enterprises.

Government intervention
Meanwhile, back in Taiwan, the government reportedly said in mid-December that it would offer financial assistance to Taiwanese DRAM makers who can secure core production technologies and undertake industry consolidation to make the island's DRAM sector more competitive.

It is believed that Elpida and Powerchip Semiconductor Corp. submitted a proposal to the Taiwan government in late December pushing for industry consolidation in exchange for financial aid. The Dow Jones reported that the government has told the companies to revise the proposal.

Separately, Elpida submitted a proposal with ProMOS to the Taiwan government in early January, seeking consolidation through Rexchip Electronics Corp., a joint venture between Elpida and Powerchip.

Again, the Down Jones reported that the government said the proposal had to be amended, because Powerchip didn't endorse it.

Elpida told EE Times Feb. 4 that the Japanese company is discussing a merger or consolidation with Powerchip, Rexchip and ProMOS. But the company declined to comment on any on-going negotiations with the Taiwanese.

- Junko Yoshida
EE Times





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