Hann Star Board has halted printed circuit board (PCB) production at its 1A China plant.

The company, a major supplier of notebook PCBs, reported heavy losses of NT$6 million ($181,430) for the month of November.

Indeed, netbook PCB orders plummeted by 25 per cent, while notebook PCBs recorded a 53 per cent decline compared to October. Hann Star estimates that netbook PCB shipments will decrease by 30 per cent in December, with the overall utilisation rate falling to 50 per cent.

The temporary closure will reportedly help reduce personnel expenses by 40 per cent and increase gross margins by up to one or two percentage points. However, the facility is slated to reopen in mid-February to meet an expected surge in orders as market recovery begins.

Meanwhile, the price of Micro SD cards has jumped by 50 per cent after Samsung Electronics limited production of the unit. A recent decision by Hynix to slash DRAM output by 20 to 30 per cent has had a similiar effect, with Taiwan's memory manufacturers reporting an 18 per cent increase in the pricing of 1GB DDR2. It should be noted that a wary Taipei had pledged to avert a mass industry shutdown by extending finacial aid to the failing sector.

"The government will follow the market mechanism, while taking into consideration industrial development and a consensus among the public, to push the nation's DRAM industry forward," said vice economic minister Shih Yen-shiang. He added that Taipei would extend bank loans and had considered purchasing stakes in any new entity.

Shih's announcement follows Gartner's recent warning against a wide-scale bailout of the collapsing industry.

"News continues to show the dire financial situation that most of the vendors are in, with speculation that governments will step in to support the manufacturers," explained Andrew Norwood, research VP at Gartner. "Widespread government support for the industry would be a disaster: It would just prolong the current downturn rather than forcing the vendors to further reduce production or causing consolidation."

Nevertheless, Chii-Ming Yiin, Taiwan's minister of economic affairs, confirmed the approval of a rescue package and the implementation of its various aspects. X

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