Taipei has increased its efforts to rescue Taiwan's ailing memory manufacturers.

According to Vice President Vincent Siew, the government will not abandon the memory industry which currently accounts for 30 per cent of global supplies. Siew also encouraged the industry to "consolidate."

"If our DRAM industry in Taiwan can't take advantage of this opportunity and upgrade and become more competitive, even without the financial crisis, you can't survive," Siew told an American Chamber of Commerce meeting.

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.

As IT Examiner previously reported, the slump in the price of DRAM has prompted the Taiwanese government to provide local manufacturers with financial aid. Taipei 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.

Pai Pei-lin, VP and spokesperson of Nanya Technology, blamed low-end devices such as the EEE PC and Netbook for negatively affecting sales.

"The more these gadgets sell, the worse off the DRAM industry becomes," Pei-lin told the Taiwan Journal.

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. This could force large Korean manufacturers to formulate cost-cutting alliances with Taiwanese companies.

However, memory manufacturers are not the only companies facing a potentially drastic decline in exports. The DigiTimes reports that large-size LCD panel shipments are expected to drop in the fourth quarter after decreasing 2.4 per cent during the third quarter.

"Taiwan's large-size TFT LCD panel shipments dropped in the third quarter at a pace faster than the industry's average," explained Digitimes research display analyst, Tony Huang. "In the fourth quarter, demand for LCD TV panels will remain sluggish. With such major TV brands as Samsung Electronics, LG Electronics and Sony cutting their panel orders, Taiwan's TV panel shipments will drop drastically." X

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