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Micron seeks role in Taiwan DRAM restructuring

Posted: 04 Mar 2009     Print Version  Bookmark and Share

Keywords:memory chip manufacturers  DRAM restructuring  memory chips  DRAM chips 

Chipmaker Micron Technology Inc. is in discussions with the Taiwanese government about taking a role in restructuring the island's memory chip manufacturers.

According to a Micron spokesperson, the proposal would involve Micron sharing up to 2,000 of its 17,000 patents and potentially creating a "joint-development model" that would place certain research and development activities in Taiwan.

Such a deal would involve Micron taking a stake in a holding company formed by the government of Taiwan that would include some of the island's struggling DRAM chip makers, though Micron would not specify which companies.

Taiwan's economic minister previously told Reuters the government has up to Rs.9,945 crore ($2 billion) to bail out the sector, which has been hurt by falling prices and a supply glut, and could take major stakes in any joint ventures.

Taiwan's top three memory chip manufacturers, ProMOS, Powerchip and Nanya Technology, have been working on restructuring plans with the government since late December.

"Micron is interested in this effort because it creates a better environment for the DRAM industry and provides Micron with a cost-efficient way to grow its scale," said Micron spokesperson Dan Francisco.

Micron and Japan's Elpida have both been widely reported to be in discussions with Taiwan about a bailout of the sector.

Saturday, Michael Sadler, executive vice president of Inotera Inc., a joint venture of Micron and Nanya, was quoted by a Taiwan newspaper as saying Micron would offer "the most preferential conditions" for a holding company.

Francisco would not say whether Micron's proposal involved any funding on its part, citing the ongoing nature of the negotiations.

He did not say when the proposal was submitted, but noted negotiations have been under way for weeks.

Money from Taiwan government
Analysts say the Taiwan government could initially set up a new holding company for memory chips, in which foreign companies could bring in advanced technologies in exchange for stakes. The new company would be better placed to compete against South Korean DRAM leaders Samsung and Hynix, according to analysts.

"If the Taiwan government is going to hand out money, Micron doesn't want to be cut off," says Auriga USA analyst Daniel Berenbaum.

"If I'm Micron I would rather get money from the Taiwan government than see that money go to competitors," Berenbaum said.

Taiwan's manufacturers produce nearly a quarter of the DRAM chips used in PCs and other electronic gadgets. The market for DRAM chips has been racked by an industry wide oversupply, exacerbated by plummeting demand for PCs and electronic goods that use the chips amid the global economic slowdown.

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