The government’s efforts to restructure the troubled computer memory chip sector has made little headway since a consolidation plan was unveiled earlier this year when local companies were in a financial mess.
Moreover, a recent price rebound for dynamic random access memory (DRAM) chips and expected new chip demand following the launch of Microsoft Corp’s Windows 7 operating system are likely to undermine the government’s clout in shaping the industry landscape, analysts and companies said.
“The government’s efforts are destined to be a flop,” Liu Szu-liang (劉思良), a DRAM analyst with Yuanta Investment Consulting (元大投顧), said by telephone on Friday. “The optimal timing for consolidation and securing technological support from outside has passed.”
Global DRAM prices leaped 21 percent quarter-on-quarter in the third quarter, after a rise of 19 percent in the previous quarter, market researcher iSuppli Corp said in its latest report on Thursday. The second-quarter price rebound marked the first since the fourth quarter of 2006, the report showed.
“Third-quarter results from major suppliers show that the DRAM industry recovery is no mirage,” Mike Howard, senior analyst at iSuppli, said in a statement.
Taiwan’s major DRAM makers — Nanya Technology Corp (南亞科技), Powerchip Semiconductor Corp (力晶半導體), Inotera Memories Inc (華亞科技) and ProMOS Technologies Inc (茂德科技) — have seen monthly revenues rise by 15 percent per month for the last three months, iSuppli said.
Meanwhile, Nanya and Inotera on Wednesday posted narrower losses for the third quarter, indicating further progress toward profitability.
“It is almost impossible now to bring DRAM representatives back to the negotiating table as rebounding demand ignites their new hope of making a comeback without government controls,” Liu said.
TAIWAN MEMORY CO
In June, the government-backed Taiwan Memory Co (TMC, 台灣創新記憶體公司) was launched with small capital of NT$500,000. In July, the government said it would allocate a maximum of NT$30 billion (US$926 million) to support one or two DRAM companies to compete with South Korean firms and set last Tuesday as the deadline for local firms to submit requests for government funds.
The government hoped the establishment of TMC would help overhaul the local DRAM sector. TMC, however, has made no progress apart from saying it was seeking a partnership with Elpida Memory Inc, Japan’s biggest memory-chip maker, as its technological partner and secured supply capacity from ProMOS.
One obvious example that local DRAM companies feel no need for government support is Nanya’s announcement last Tuesday that it decided not to launch a consolidation plan to get a government capital injection.
“The DRAM industry is now different from what it was a year ago. The best timing for DRAM reformation or consolidation under this scheme has passed. To consolidate partial capacity does not bring much help to DRAM restructuring,” Nanya, the nation’s top DRAM maker, said in a statement issued after the application deadline passed.
Inotera president Charles Kau (高啟全) also said the company would not apply for state funding because market situations had improved.
Inotera is a joint venture between Nanya and Micron.
“At present, every DRAM company has found a way [to survive],” Kau told reporters last week. “And we are able to do what the government meant to do [developing technologies independently and rooting technologies in Taiwan] on our own,” Kau said. “Private companies should not run their businesses with public funds.”
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