Mon, Nov 17, 2008 - Page 12 News List

Task force formed to help chipmakers

TO THE RESCUETaipei-based researcher DRAMeXchange Technology Inc expected at least two companies to be forced out of business if chip prices continued to drop


The government said it has set up a special task force to work out rescue plans to help cash-strapped local computer memory chipmakers survive the severest industry slump it has faced because of a supply glut and global economic turbulence.

Amid wide-ranging controversy, the Minister of Economics finally stepped in, handling the nation’s shaky dynamic random access memory (DRAM) industry to avoid the industry’s collapse and a consequent ripple effect on the nation’s financial sector.

The move came after the government said it would help DRAM companies led by Powerchip Semiconductor Corp (力晶半導體) get extensions on bank loans totaling NT$420 billion (US$12.7 billion) along with other minor short-term measures to ease their financial stress earlier last week.

The special task force, headed by Ministry of Economic Affairs Vice Minister Shih Yen-hsiang (施顏祥), tried to find any possible way out for local DRAM players after holding deeper discussions with those companies and industry experts, the ministry said yesterday.

No substantial plans have been made yet, the ministry said. Speculation has circulated that the government agency could inject fresh capital into the companies and could play the role of “matchmaker” to push for consolidation.

The ministry only said it would be glad to see any merger and acquisition deal in the industry.

The nation’s four major DRAM companies have lost over NT$90 billion in total during the first three quarters of this year.

“While capital injection [from the government] may allow these companies to continue operations, their different technology alliances will make any consolidation efforts difficult to achieve,” said Timothy Lam, a semiconductor industry analyst with Citigroup Inc, in a report dated on Thursday.

Under the government supports, Taiwan and South Korea became the world’s major DRAM chip exporters after the price plunged over 40 percent since the start of the year.

Powerchip is making DRAM chips on advanced technologies from Japan Elpida Memory Inc, while Nanya Technology Corp (南亞科技), the nation’s second-largest DRAM chip supplier, is now cooperating with new technological partner Micron Technology Inc in making chips at cost-effective factories.

The nation’s third-largest DRAM chipmaker ProMOS Technologies Inc (茂德科技) relies on South Korean Hynix Semiconductor technological support.

“Nothing is impossible,” said Vincent Lee (李冠樺), a senior semiconductor industry analyst at the government-backed Industrial Technology Research Institute (ITRI). “I believe we will see a landscape change during the latest downturn.”

Lee commented on potential consolidation, implying that technology should not be a determining factor in much-anticipated mergers. The government is seeking suggestions from ITRI to draw up policies on the nation’s key industries.

Taipei-based researcher DRAMeXchange Technology Inc (集邦科技) expected at least two local DRAM chipmakers to be forced out of the market next quarter if the chip price extended its downward spiral into next year.

The DRAM price may fall another 20 percent to 30 percent in the fourth quarter from the third quarter, despite chipmakers lowering output in an attempt to buoy chip prices, the researcher forecast.

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