Powerchip Semiconductor Corporation (PSC) chairman Frank Huang has pleaded with Taipei to formulate a comprehensive rescue plan for the island's rapidly deteriorating memory industry.
According to Huang, a government bailout of chip manufacturers would help avoid a South Korean-dominated memory market. Huang explained that the Korean memory industry was capable of a larger production scale and creating competitive indigenous technology. In addition, Huang noted that Seoul's support for its chip manufacturers allowed the industry to successfully weather harsh economic conditions. The panicked PSC chairman warned that a wide-scale bankruptcy of DRAM manufacturers could lead to a domino effect that would ultimately damage Taiwan's fragile financial sector.
 Promos chairman ML Chen expressed similiar sentiments and urged Taipei to follow Seoul's example of indirectly providing Hynix Semiconductor with financial aid. Chen also stated that a government rescue plan would help create long-term stability and growth.
Meanwhile, Chii-Ming Yiin, Taiwan's minister of economic affairs, confirmed that the Ministry of Economic Affairs (MOEA) has approved a rescue package for local Taiwan DRAM companies. The MOEA has reportedly begun implementing various measures related to the plan.
However, the memory industry continues to report heavy losses. For example, Etron Technology and Elite Semiconductor Memory Technology (ESMT) recently posted significant revenue decreases for November. Etron recorded revenues of NT$406 million ($12 million), down a sequential 28.9 per cent. The company generated accumulated sales of NT $7,294 million from January to November, which represented a 40.3 per cent decrease compared with the same period of 2007. ESMT announced a revenue drop of 62.6 per cent on year and a sequential decrease of 46.5 per cent.
As IT Examiner previously reported, the Taiwanese government has nixed proposals for a wide-scale bailout of DRAM manufacturers. The Council of Economic Planning and Development (CEPD) has instead supported plans to actively promote a consolidation intitative for the ailing industry. According to CEPD chairman Chen Tain-jy, the government will also grant financial aid to manufacturers capable of developing indigenous and competitive technology.
"The plight of the DRAM industry is very much known to the government and we are taking effective measures to help. We will be very careful about doing the kind of capital injection the US is doing," explained Taiwan President Ma Ying-jeou.
Ma also acknowledged the importance of the DRAM industry in Tawian.
"Their (manufacturers) fall would not only affect the IT industry but also our banking system as well. We understand that very well. The premier and even the vice president, Vincent Siew, are involved in trying to figure out a plan for their survival," said Ma.
Formosa Plastics Group (FPG) has already heeded Taipei's call to assist memory makers. The company recently announced the extension of a $285 million short-term loan to Micron Technology to fund its acquisition of the stake owned by Qimonda Memory in Inotera Memories. The move should help consolidate the strategic partnership between Micron and Nan Ya/Inotera, thereby facilitating a critical RAM technology upgrade to 50-68 nanometres.
Powerchip and Japan's Elpida have also initiated negotations over a possible alliance. The two companies currently manage a joint venture known as Rexchip Electronics Corp in Taiwan.
"We will explore further cooperation (with Powerchip), but it is too early to discuss the details. We leave the door open to other Taiwan DRAM firms, but there are no contacts at present," confirmed tight-lipped Elpida CEO, Yukio Sakamoto.
The grim outlook for memory manufacturers is not expected to improve any time soon. Analysts estimate a sequential drop of approximately six per cent, or 70,000 wafers (12-inch equivalents), in overall DRAM output during the first quarter of 2009. X
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