Taiwanese troubled DRAM makers cause split in bail-out plan

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Micron-Nanya supporter to depart from Taiwan economics ministry


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Josephine Lien, Taipei; Jessie Shen, DIGITIMES [Monday 16 February 2009]

Pushing for the consolidation of the local DRAM industry and technological transfers from foreign players, Taiwan's Ministry of Economic Afairs (MOEA) has seen two separate camps within its ranks supporting either Micron Technology or Elpida Memory, government insiders have revealed.

Vice economics minister Shih Yen-shiang is the major supporter for the Micron-led camp, which includes Nanya Technology and Inotera Memories, the sources claimed. On the other side is Chen Chao-Yih, head of the Industrial Development Bureau (IDB), who backs Elpida, whose local partner is Powerchip Semiconductor Corporation (PSC), the sources said.

The Micron camp was caught off guard on February 5 when the government announced that Shih would be departing for a new post as chairman of a state-run oil company, the sources said.

Fearing that Shih's exit would hamper their chances, the Micron camp then scrambled to come up with a propsoal calling for the consoldiation of all DRAM makers in Taiwan, Japan and US, the sources said. But the plan was submitted to the MOEA without the endorsement of Elpida, PSC, Rexchip Electronics, ProMOS Technologies, or Winbond Electronics, the sources indicated.

The government reportedly now favors the Elpida camp, planning to invest in a new DRAM company to be formed by the Japan maker and Rexchip, its Taiwan-based joint-venture with PSC, the sources noted.

The government thinks that the Micron project – where the US firm, Nanya and Elpia will be the "parents," and Inotera, PSC, ProMOS, Rexchip and Winbond will be the "subsidiaries" – would be too huge and complex a task to accomplish, the sources remarked.

Micron chairman and CEO Steven Appleton reportedly has visited Elpida's president Yukio Sakamoto in Japan for several times, expressing the idea of uniting non-Korean DRAM players. But the sources said Elpida has shown little interest in the Micron plan.

The MOEA has spelt out the objective for the Taiwan government's rescue plan for the island's struggling DRAM sector: to have key technologies transferred from overseas. The ministry earlier this month said that the Taiwan government will initiate efforts to downsize the local DRAM industry and acquire key technologies from overseas for helping the sector's evolution.

 

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Taiwan banks 'agree' loan for ailing chip maker ProMOS (AFP)

* Posted on Mon Feb 16, 2009 11:22AM EST

TAIPEI (AFP) - A consortium of banks said Monday they have tentatively agreed to provide a new loan of three billion Taiwan dollars (88.23 million US) requested by ailing memory chip maker ProMOS Technologies Inc.

The state Bank of Taiwan, which leads the consortium of eight creditor banks, said "they had reached a tentative agreement to grant a three billion Taiwan dollar loan to ProMOS," -- two billion dollars short of the amount sought by the company.

The agreement requires final approval of the banks' separate boards, the bank said in a statement late Monday night.

Bank of Taiwan itself will lend ProMOS 700 million Taiwan dollars, it said.

The loan, it said, "will be used to redeem its overseas convertible bonds."

ProMOS, a maker of dynamic random access memory (DRAM) chips, was not immediately reachable for comment. The company badly needs the money to meet the possible redemption of 330 million US dollars worth of overseas convertible bonds it issued in 2007.

An unnamed executive at one of the largest creditor banks told Dow Jones Newswires earlier in the day that there would "definitely be a consensus today."

Without the loan, it was feared that ProMOS would not have sufficient funds to pay its bondholders and sustain operations, leading to a possible default.

The memory chip maker has posted almost two years of losses as chip prices tumble amid a supply glut.

Bank of Taiwan chairwoman Susan Chang said earlier in the day that "it would be too late if we don't decide today" because banks need time to arrange the loan.

ProMOS has been in talks with other DRAM makers in Asia including Japan's Elpida Memory Inc. to consolidate amid the industry's worst downturn since 2001.

Taiwanese authorities have said they want to aid the industry but not individual firms.

In the nine months to September, the island's four major DRAM makers jointly booked a record net loss of more than 90 billion Taiwan dollars, with a full-year loss surging to 120 billion Taiwan dollars, figures show.

Industry critics, however, oppose a government bailout of the local sector which they say is uncompetitive and too reliant on overseas companies who supply crucial advanced core technology.

ProMOS first acquired production technology from Germany's Qimonda and since 2005 has used crucial production technologies from South Korea's Hynix.