Fri, Jan 09, 2009 - Page 12 News List

ProMOS files consolidation plan

BAILOUT The Taiwanese chipmaker hopes that the plan meets the government’s requirements so it could obtain much-needed aid to avoid a financial collapse

By Lisa Wang  /  STAFF REPORTER ,

ProMOS Technologies Inc (茂德科技), the nation’s third-largest computer memory chipmaker, yesterday said it had filed a consolidation plan jointly with Japanese memory chipmaker Elpida Memory Inc in hopes of receiving a government bailout.

The consolidation plan comes five weeks prior to the date of maturity in mid-February of US$330 million in ProMOS corporate bonds with embedded call options for investors.

“We filed an industrial consolidation proposal jointly with Elpida on Jan. 7. Both companies’ chairmen have their signed the proposal,” ProMOS spokesman Ben Tseng (曾邦助) said by telephone, confirming a report by the Chinese-language Economic Daily News yesterday.

The filing also marks the latest move by Elpida, the largest memory chipmaker in Japan, after the government rejected a bailout proposal filed with Powerchip Semiconductor Corp (力晶半導體), Taiwan’s largest computer chipmaker, on Dec. 26.

“We hope the proposal will meet the government’s requirements,” Tseng said.

Tseng declined to reveal further information.

With a fresh cash injection, the government hopes Taiwanese chipmakers, notably manufacturers of dynamic random access memory (DRAM), would be able to resolve a persistent problem — the inability to develop core technologies on their own. By forming closer ties with their overseas peers, Taiwanese DRAM makers could turn this downturn into an opportunity to gather strength and recover.

In an e-mail responding to the Taipei Times’ question about potential cooperation between Elpida and ProMOS, Elpida chief executive Yukio Sakamoto said: “I’m not in a position to reply to that kind of speculation.”

The Economic Daily News report, without citing sources, said that Elpida and ProMOS had proposed merging ProMOS and Taichung-based Rexchip Electronics Inc (瑞晶電子), a joint venture between Elpida and Powerchip. Elpida holds a 52 percent stake in the venture.

Asked by the Taipei Times on Wednesday whether the government aims to finalize its bailout plan before ProMOS collapses because of bond defaults next month, Industrial Development Bureau Director-General Chen Chao-yi (陳昭義) said: “We expect to clinch the matter by that time.”

Meanwhile, Nanya Technology Corp (南亞科技), the nation’s No. 2 DRAM supplier, has said it is still in discussion with its US partner, Micron Technology Inc, on proposing a bailout plan.

Separately, Powerchip yesterday said that sales last month plunged nearly 70 percent to NT$1.31 billion from NT$4.33 billion a year earlier, citing continued price declines and output reduction.

But the chipmaker said in a statement that chip prices were on the rebound in the wake of industrywide output cuts, leading to expectations of an easing in oversupply amid falling inventories.

Shares of ProMOS fell 5.3 percent to NT$2.13 yesterday, slightly underperforming the benchmark TAIEX, which lost 5.3 percent.

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