Taipei has reportedly nixed proposals for a wide-scale bailout of DRAM manufacturers.

The Council of Economic Planning and Development (CEPD) now 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.

Taiwan's 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 drastic slump in the price of DRAM has prompted the government to provide local manufacturers with financial aid. Taiwan has also granted embattled firms six months grace from creditors as well as bank loan extensions. Nevertheless, pessimistic market analysts continue to project significant losses for the industry and predict a total yearly deficit of $3 billion. For example, South Korea's Hynix Semiconductor lost over $1 billion during the third quarter of 2008, while US-based Micron Technology recorded quarterly losses of US $344 million.

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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