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Taiwan DRAM makers merge talks heat up

Posted: 23 Jan 2009     Print Version  Bookmark and Share

Keywords:DRAM  memory chip  merger 

Talks to consolidate Taiwan's stressed DRAM memory chip industry heat up on Wednesday (Jan. 21), with major domestic and foreign players meeting government officials in a bid to reach deals as the Lunar New Year approaches.

Taiwan's top three DRAM makers, Powerchip, Nanya Technology and ProMOS, have all been meeting with government officials to discuss possible mergers or other measures aimed at reducing a chronic supply glut in the market for DRAM chips, which mostly power personal computers.

Executives from Japan's Elpida and U.S. firm Micron Technology, partners for Powerchip and Nanya, respectively, were also planning trips or had come recently for talks as the industry grapples with its worst ever downturn.

Makers of DRAM chips are battling a long supply glut and now a slump in demand amid a spreading global recession that is causing them to lose money on each chip they make.

Shares of Powerchip, ProMOS and Elpida all jumped by more than 6 per cent on Wednesday after a string of media reports and company statements that indicated efforts were heating up to restructure the industry before the week-long Lunar holidays start next week.

Japan's Elpida Memory said it was in talks with Taiwanese DRAM makers including Powerchip, ProMOS Technologies and Rexchip, its chip joint venture with Powerchip, on a possible merger as well as some other options.

"We are discussing several possibilities, but nothing has been decided," Elpida spokesman Hideki Saito said.

Elpida and Powerchip have previously said they are considering a number of tie-ups, including a merger.

Meanwhile, Taiwan's Chinese-language Economic Daily, citing an executive at No. 2 DRAM maker Nanya Technology, said the Taiwan government would like to merge all of the island's struggling DRAM makers into a single company.

Analysts agreed such a combination would likely be better placed to compete with the top two global players, Samsung Electronics and Hynix Semiconductor but remained sceptical such a vision could be achieved.

"Ideally that is good for Taiwan if we can see a super party emerge but, for now, I would say it is just a dream," said Primasia semiconductor analyst Kenneth Lee.

Without a single, powerful, local company to drive consolidation, Taiwan's government has been trying to engineer mergers as a severe cash crunch threatens the island's DRAM chip makers.

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