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Taiwan Government to Lead DRAM Consolidation Plan

2009/02/04 | By Ken Liu

Taipei, Feb. 4, 2009 (CENS)--Taiwan government will put forward by the end of February a framework for the consolidation of the island's DRAM industry, which is undergoing worst-ever financial plight, according to Economic Minister C.M. Yiin.

The minister yesterday said the government will invite local DRAM chipmakers to join the combination plan but will never transform the combined body into a state-run organization.

Yiin stressed that DRAM-chip making and silicon foundry constitute the two major pillars of Taiwan's semiconductor industry, leaving no excuse for the government not to save the debt-ridden DRAM industry. He added the government will come to the rescue with financial bailout as short-term measure and industry-wide combination as long-term measure.

Bailout measures, Yiin said, include extending the maturity of their financial notes and loans. The government, he noted, is assisting chipmakers ProMOS Technologies Inc. and Powerchip Semiconductor Corp. (PSC) to convince their creditors to give them the extensions.

The combination task is designed to help the Taiwan industry hone competitiveness and secure crucial technologies for the development of next-generation products. Yiin said the government has contacted Elpida Memory and Micron Technology on combination plan and they are willing to cooperate with the government although they still have some different ideas.

As to ProMOS' Feb. 14 maturity of European convertible bonds (ECBs), the minister said the company's nine creditor banks already agreed to conditionally offer a fresh loan of NT$5 billion (US$151 million at US$1:NT$33) as part of the required NT$11 billion (US$333 million) for the redeem. He noted an unnamed testing and packaging house headquartered in the United States promised to act as the guarantor of ProMOS and an unnamed company agreed to offer its machines as collateral in the fresh loan. Industry watchers assume Kingston Technology to be the guarantor.

Yiin said the approach to ease ProMOS' ECB predicament will become a standard rescue model for other DRAM chipmakers facing similar problem.

When asked if the government will not let any of the island's DRAM chipmakers, including Nanya Technology Corp. and Inotera Memories Inc. in addition to PSC and ProMOS, go under, Yiin simply said some vulnerable companies are not rescuable even if the government hopes to save them.