The Ministry of Economic Affairs is reviewing several consolidation scenarios for manufacturers of computer memory or dynamic random access memory (DRAM) chips, Minister of Economic Affairs Yiin Chii-ming (尹啟銘) said last night.
“Every scenario has its advantages and disadvantages. Hence we are evaluating all possible options, as well as contacting local companies to get buy-ins,” Yiin said.
After all, he said it is the companies that must partner up, the ministry cannot force alliances.
After polling individual market players, the idea of consolidating all local DRAM makers into one giant company was off the boards, Yiin said.
“Such an arrangement would be an utter catastrophe,” he said.
His evening briefing followed a morning meeting with Yukio Sakamoto, president and chief executive officer of Japan’s Elpida Memory Inc, amid media reports that the government would support a consolidation proposal submitted by Nanya Technology Corp (南亞科技), Inotera Memories Inc (華亞科技) and Micron Technology Inc of the US.
Yiin did not confirm the newspaper reports, but said he had a lengthy discussion with Sakamoto on the status of the industry and individual companies in the US, South Korea, Japan and Taiwan.
Yiin said Sakamoto wanted to tell him that Japan’s state bailout funds would not be enough to rescue his firm. Elpida was keen on securing Taiwanese funding and was willing to cooperate with the government on any level, Yiin said.
In an e-mail to the Taipei Times yesterday, Elpida spokesperson Kumi Higuchi confirmed that the company’s president was in Taipei.
But she denied a report in the Nikkei Shimbun yesterday that Elpida was about to “sign a basic agreement with the Taiwanese companies today” including Powerchip Semiconductor Corp (力晶半導體) and Rexchip Electronics Co (瑞晶半導體).
Powerchip vice president and spokesman Eric Tang (譚仲民) also dismissed the consolidation report on Radio Taiwan International yesterday.
“Powerchip and Elpida have not reached a consensus since their negotiation last month. Hence such suggestions of potential strategic consolidation is pure speculation,” he said.
Meanwhile, Winbond Electronics Corp (華邦電子) chief financial officer James Wen (溫堅) said by telephone yesterday that the company was interested in participating in government-led consolidation plans, be it a camp backed by Elpida or Micron’s technology.
While Elpida hopes to tap on Taiwan’s National Development Fund (國發基金) for help, Yiin said NT$30 billion (US$883.3 million) of the fund’s NT$100 billion is already allocated to helping small businesses.
Whether the entire remaining NT$70 billion would be used to save the domestic DRAM industry had not been decided, he said.
“One thing is for sure. NT$70 billion will not be enough to save our DRAM industry,” he said.
The ministry also confirmed yesterday that it had received the consolidation plan proposed by Nanya, Inotera and Micron last Friday. Yiin said he had met with representatives from Micron since then and the Industrial Development Bureau was reviewing the proposal.
“This question we have to ask ourselves is: Do we need this industry? And the answer is yes. DRAM is a money-burning industry and for individual companies the barriers for entry and exit are high,” Yiin said.
“Too many downstream technology companies will be affected if we let the DRAM industry fail. The consequences would be unthinkable,” he said.
ADDITIONAL REPORTING BY KEVEN CHEN AND LISA WANG
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