Sat, Dec 06, 2008 page12

• ProMOS denies plans to shutter all production

  • By Lisa Wang / STAFF REPORTER
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  ProMOS Technologies Inc (茂德科技), the nation’s third-largest computer memory chipmaker, yesterday said it might cut output at a faster-than-expected pace to stem losses, but has no plans to completely shut down operations.

  ProMOS spokesman Ben Tseng (曾邦助) said the company “operates normally and any speculation about any new factory closure is untrue.”

  Tseng made the remarks in the wake of a report yesterday by the Chinese-language Commercial Times that ProMOS had shut down two plants, including an advanced 12-inch factory in Hsinchu and a less cost-efficient 8-inch plant, because of a cash crunch.

  The report said gas suppliers had stopped supplying ProMOS gas it uses to clean wafers at its 8-inch and 12-inch fabs in Hsinchu, northern Taiwan.

  Speculation about its possible closure has mounted as ProMOS posted the biggest nine-month loss and has the weakest balance sheet among the nation’s major manufacturers of dynamic random access memory (DRAM) chips.

  OUTPUT CUT

  To cope with the economic downturn, ProMOS said it might cut output this quarter by more than 20 percent from last quarter — instead of the 15 percent cut it said in October — and had asked employees to take unpaid leave since last month, Tseng said by telephone yesterday.

  ProMOS and its local peers have recently been in the media spotlight as a global supply glut and economic turbulence have caused huge losses for all chipmakers and they are seeking financial support to help them weather the industry’s severest slump in history.

  “We’ve held discussions with the government about our strategies and measures [to cope with the downturn], and we hope the government will show its support for the industry,” Tseng said, without elaborating.

  ProMOS is the only local DRAM company that has made public its desire for government support. The company’s sales dropped 42 percent year-on-year last month to NT$1.37 billion (US$40.8 million), or a 32 percent month-on-month decrease, it said in a stock exchange filing.

  In the middle of last month, the government set up a cross-ministerial special task force to map out a rescue plan for cash-strapped DRAM chipmakers.

  Industrial Development Bureau Director-General Chen Chao-yih (陳昭義), a member of the task force, said yesterday that the government was evaluating measures to save the DRAM industry, including helping chipmakers rollover their bank loans and pushing for industrial consolidation.

  “One of the subjects of intensive debate was whether the government should get involved [in the industry consolidation],” Chen said, adding that they would hold more discussions before making a final decision.

  On Wednesday, the legislature’s Economics Committee approved a Cabinet proposal to expand the size of the Cabinet’s National Development Fund (國發基金) to NT$100 billion.

  The fund is largely used to promote the development of vital industries and cutting-edge technologies.

  CONSOLIDATION

  The legislature also approved a resolution on Wednesday requesting the government to push for consolidation in the DRAM industry if it wanted to use part of the NT$100 billion fund to rescue the industry, rather than simply injecting capital into the chipmaking companies.

  “Or else it would be a waste of taxpayers’ money,” Democratic Progressive Party (DPP) Legislator Pan Meng-an (潘孟安) said at the time.

  The government is aware of the plight of DRAM makers and is taking effective measures to help local makers, President Ma Ying-jeou (馬英九) said at a press briefing on Wednesday.

  “But that help doesn’t mean a financial injection of capital” because of the administration’s plan to push for industrial reforms, Ma told the Taiwan Foreign Correspondents’ Club in Taipei while fielding a question about the government’s rescue plans for DRAM makers.

  “Certainly the government will stand by to help them. We are in close contact with the industry leaders on this issue and we understand very well how much weight the DRAM industry carries in Taiwan,” he said.

  Last month, Powerchip Semiconductor Corp (力晶半導體) chairman Frank Huang (黃崇仁) urged the government to help DRAM companies through the downturn, but said the government should not get deeply involved in the industry’s consolidation.

  “Let the market mechanism work,” Huang said.

  ADDITIONAL REPORTING BY RICHARD HAZELDINE AND KELSON WANG
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