Taiwan DRAM bailout redux: Bailout numbers, who wants in, Elpida’s role

Jan. 6, 2009 – Multiple media sources report that Taiwan’s National Development Fund is ready to appropriate NT$200B (about US $6B) to underpin its DRAM and flat-panel display industries; meanwhile individual companies are still hashing out their individual needs (and whether they meet criteria). And an outside party is stumping to be a DRAM consolidator.

Premier Liu Chao-shiuan wants DRAM and FPD companies to use the new funds to acquire key technologies, extend inroads both within and outside their sectors, and restructure and strengthen their organizations, notes the Taiwan Economic News. The two industries currently generate about NT $1T (US ~$30B). The NDF’s proposed bailout package dwarfs a NT $7B (US $212M) investment in WiMAX technology over the past five years.

What the government will not do, apparently, is simply hand out money to individual companies. It has already rejected a NT $40B (US $1.2B) bailout request from PowerChip Semiconductor (PSC) which fell short of requirements to aid Taiwan-centric DRAM efforts, reports the Taiwan Economic News. Both the Ministry of Economic Affairs (MOEA) and ProMOS, a projected takeover candidate in Taiwan’s DRAM shakeout, both declined to support the PSC proposal. Powerchip Semiconductor is expected to refile its proposal for bailout funds, though it’s unclear how the government will interpret the firm’s use of DRAM stack process technology imported via Japan’s Elpida Memory, PSC’s JV partner in memory manufacturing firm Rexchip Electronics, notes Digitimes.

Nanya Technology and its US-based JV partner Micron also are seeking government help. Digitimes reports their proposal includes “roadmaps for Nanya’s technology self-development, utilization of the bailout funds and integration with ProMOS Technologies,” and estimates the cost to transfer Micron’s processes at NT $10B-$20B (US ~$300M-600M).

Speaking of Elpida, the company appears to be determined to be a consolidating force in Taiwan’s DRAM industry. Company president/CEO Yukio Sakamoto is quoted saying he’s in talks with local firms about a four-way consolidation involving ProMOS, PSC, and Rexchip, note both the Taiwan Economic News and Digitimes. Such a combination would surpass Samsung as the world’s No.1 DRAM manufacturer, and wield significant influence over DRAM spot-market prices in Asia. PSC reportedly would welcome Elpida’s acquisition of ProMOS, though ProMOS’ debt position would be a sticking point. No decision has yet been reached.

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