Jan. 18, 2008 – Taiwan DRAM manufacturers bleeding red ink are asking for a break from their chip assemblers, who still are enjoying profitability despite the current market softness, notes a report in the Taiwan Economic News.

PowerChip, ProMOS, Nanya, and Inotera all took big hits in 2007 as DRAM prices collapsed, seeing losses ranging from 40%-50% — but their contract assembly suppliers (e.g. Powertech Technology, Thailin Semiconductor, Walton Advanced Engineering, and Formosa Advanced Technologies) have still been enjoying ~20%-30% gross margins.

So the DRAM makers have asked the suppliers for a 20% break in their quotation prices. And most have accepted — under the threat that contract buyers would ship gross dies instead of packaged and tested chips to customers if the requests were turned down, the paper notes.

Most of the island’s DRAM makers are ramping 70nm process capacity for 512Mb DDR2 chips, hoping to lower the chip costs to $1.20-$1.30, down from $1.60-$1.80. And they’re asking for packaging and testing service charges to be lowered from $0.80/chip to $0.65/chip, according to the paper.