Fri, Jan 10, 2003 - Page 10 News List

Infineon advertises for allies in battle with chip company

BLOOMBERG , TAIPEI

Infineon Technologies AG, the world's No. 4 maker of computer-memory chips, placed ads in two local Chinese-language newspapers yesterday urging investors in chipmaker ProMos Technologies Inc (茂德科技) to support the German company's proposals at a shareholder's meeting today.

"Vote for Infineon's representatives on the ProMos board or independent candidates," Infineon said in the advertisements. "Your votes will ensure ProMos's continued success."

Infineon, ProMos's No. 2 shareholder and one of its largest customers until last year, is battling with the Taiwan company's management, which is seeking more independence and outside customers. For its part, Infineon has set up ventures with rival chipmakers on the island as it seeks to cut costs.

Infineon has proposed replacing some of its four directors on the nine-person Promos board with independent members to end the impasse. ProMos spokesman Albert Lin (林育中) said yesterday that any directors that Infineon selects will probably not be independent.

Lin didn't immediately answer calls about the Infineon ads.

Infineon has said ProMos had violated an agreement by selling 90 percent of its memory-chip output its largest shareholder, Mosel Vitelic Inc (茂矽電子). Infineon last month ended a purchasing and technology-sharing agreement with ProMos.

ProMos has said it wants a new agreement with Infineon similar to the one the Munich-based company has with Taiwan memory-chip maker Winbond Electronics Corp (華邦電子), which sells chips to Infineon under a profit-sharing arrangement.

Infineon, which yesterday backed off a threat to sell its entire 30 percent stake in ProMos and said it wants to mend fences with the company it helped found, is also building a plant with Nanya Technology Corp (南亞科技), Taiwan's No. 1 computer-memory-chip maker.

The arrangements with Promos's rivals in Taiwan are part of Infineon's attempts to cut costs as it seeks to return to profit after posting six quarters of net losses.

Infineon transferred technology to ProMos from its German 12-inch wafer factory, the world's first to make the larger wafers that can be cut into twice as many chips as eight-inch wafers.

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