Taiwan Memory denied gov’t funds; future in doubt

November 13, 2009 –  Taiwan’s efforts to consolidate its memory chip industry have hit another roadblock, with the government’s denial of an application for funding — leaving the future of the effort even more in doubt.

The goal of Taiwan Innovation Memory (originally Taiwan Memory Co.) were to take advantage of the severe downturn by pulling together under one government-funded umbrella the island’s memory firms: Powerchip Semiconductor, Rexchip Electronics, Nanya Technology, Inotera Memories, ProMOS Technologies, and Winbond Electronics. (Nanya and Inotera backed out after initial plans revealed the government-funded entity would not dole out help to individual member companies; Winbond and Powerchip later indicated they would not participate in a TIMC-centered plan, either.)

Taiwan Innovation Memory Co. had filed to receive nearly NT$5B (US ~$152M) in government assistance, but this week the legislative economics committee passed a resolution that the Ministry of Economic Affairs deny TIMC’s filing, and the MOEA thus suspended the application (both for TIMC and Powerchip which had filed separately). Without government support, plans for TIMC would essentially be abandoned, according to chairman John Hsuan, cited by the state-run Central News Agency.

Industry consensus seems to be that Taiwan missed that window of opportunity, and with memory prices on an upward trend and stability tentatively returning, such a new company would be seen as a competitor to other DRAM firms. "The time for investing in the venture has passed," ruling party legislator Ting Shouchung told Bloomberg.

The venture also was seen as particularly complex due to the participants’ use of foreign technologies (Powerchip and Rexchip with Japan’s Elpida Memory; Nanya and Inotera with Micron; and ProMOS and Winbond with Qimonda). Elpida has agreed to let TIMC use its technology in exchange for purchasing a 10% stake — but in recent days it has also signed individual partnerships with both ProMOS and Winbond.

But with the memory industry in full recovery mode now — prices have soared this year, and companies are turning profits for the first time in multiple quarters — the impetus and need for consolidation in Taiwan’s DRAM industry may have run out.


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