Taiwanese Government Confirms Intention to Bailout DRAM Makers

PowerChip Semiconductor and Nanya to Receive Aid from the Government

by Anton Shilov
12/18/2008 | 04:51 AM

Deputy economics minister of Taiwan on Tuesday openly admitted that the government will rescue Taiwanese makers of dynamic random access memory (DRAM) in case they present viable survival plans. This is the first time when a high-ranking government official openly admits such plans. Even though the Taiwanese DRAM industry is not as large as South Korea’s, it still impacts the DRAM market seriously.

 

Shih Yen-shiang, deputy economics minister, stressed that the government has no intention to bailout DRAM makers indiscriminately; moreover, if the National Development Fund, which is controlled by the government, makes direct investments into memory makers, the “government will aim to encourage the integration among domestic makers in the line and facilitate cooperation among domestic makers and their U.S. and Japanese counterparts”, reports Taiwan Economic News.

According to some estimates, Taiwanese makers of memory have debts that amount NT$700 billion ($21.598 billion) amid global mainstream DRAM prices falling below their production costs in Taiwan. Moreover, according to Mr. Shih, “some 100 domestic enterprises have applied for government bailout”, which indicates that not only DRAM industry has problems with survival in Taiwan.

The Taiwanese government has three major principles in dealing with the problem of the DRAM industry, including helping the industry establish its independent technology, helping it upgrade its international competitiveness, and assuring maximum efficiency of the investments. The deputy minister stressed that the government’s ultimate goal is to see the industry realize horizontal integration domestically and vertical integration internationally, following the strategy of “joint investment and joint R&D”, in the hope of facilitating the cooperation among Taiwan, the U.S., and Japan for the development of the industry.

PowerChip Semiconductor reportedly confirmed intention to cooperate with its Japanese partner Elpida in presenting a concrete survival plan by year end. Nanya Technologies also said it would present survival plan.