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TAIWANESE MICROCHIP PRODUCERS PLEA FOR CONSOLIDATION


A proposal to consolidate Taiwanese microchip producers, Nanya Technology, Micron, and several other memory-chip firms, were submitted to Chen Chao-Yih, director-general of Taiwan's Industrial Development Bureau last Wednesday.




A proposal to consolidate Taiwanese microchip producers, Nanya Technology, Micron, and several other memory-chip firms, were submitted to Chen Chao-Yih, director-general of Taiwan’s Industrial Development Bureau last Wednesday. This joint proposal is aimed at consolidating big firms such as Nanya, Micron, their joint-venture Inotera Memories Inc., as well as several money-losing memory-chip makers such as Powerchip Semiconductor Corp., and Windbond Electronics Corp.

The Taiwan government is working on a plan to consolidate foreign chip makers Elpida Memory Inc. of Japan, and Micron Technology Inc. of the U.S., with local companies in order to boost business. Windbond, a Taiwanese company, lost 30% of its revenue when their major client in Germany had filed for insolvency late last month.

Although Micron and Elpida are accelerating efforts to consolidate with Taiwanese peers in order to receive much-needed funds from the Taiwanese government, Chen “..hope(s) to come up with a concrete plan by the end of February…the consolidation will involve both local and foreign DRAM makers”.

Kim Higuchi of Elpida said Wednesday that its president will meet with its Taiwanese partner Powerchip Semiconductor Corp. in Taipei, to discuss a consolidation plan that would combine Elpida, Powerchip, their joint-venture Rexchip Electronics Corp. and Taiwan’s ProMOS Technologies Inc. She expressed that Elpida hopes to conclude talks by the end of February to meet the Taiwanese government’s schedule.

Despite a Nikkei report released last week stating that Sakamoto will sign a basic agreement with the Taiwanese chip-makers and the government, Higuichi denied that the companies had reached an agreement.

A combination of Elpida, Powerchip, Rexchip and ProMOS would give the combined entity a global DRAM market share of 19.3%, trailing behind South Korea’s Hynix Semiconductor Inc., which had 20.8% of the market as of the fourth quarter of 2008, according to data from U.S. market research firm iSuppli Corp. But it would still trail industry leader Samsung Electronics Co.‘s 30% market share in DRAMs.

Meanwhile, Micron and Nanya would have a combined market share of 17.8%.

Wilson Wen, a Winbond Electronics Corp. spokesman said Elpida and Micron have approached the company about a potential consolidation and willingness to be acquired by the groups, but did not give detailed plans or conditions.

To appease the continuing losses, Elpida had expressed in the past a strong willingness to consolidate with Taiwanese DRAM makers in exchange for much-needed funds. In late December, Elpida submitted separate consolidation proposals with POWERchip and ProMOS, but was later told by the government to revise these proposals. The firm may also separately seek funding from the Japanese government.

The chip-making industry overall, has taken big hits in revenue this past year. Even the world’s largest contract chip maker, Semiconductor Manufacturing, reported its worst monthly sales in years: a 58% drop. United Microelectronics Corp, the world’s second largest chip-maker, has reported a net loss of 23.51bn Taiwanese dollars. Some companies such as Spansion Inc, could no longer sustain the weak demand and filed for bankruptcy protection. Innovation and investments in new technology has become stagnant as several customers of the top three chip foundries have delayed orders and become increasingly reluctant to spend on expensive technology.

Sun Shih-wei, chief executive officer of UMC stated, “This is more severe than the last recession in 2001, 2002. Last time was just the tech sector, but now it’s every sector, housing , financial…” 

Source: AsiaEcon.org
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Source: www.asiaecon.org |


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