Domestic Banks Edgy Over Possible Defaults by DRAM & TFT-LCD Makers

Taipei, Nov. 18, 2011 (CENS)--DRAM and TFT-LCD, the two erstwhile star industries in Taiwan, have recently floundered amid the uncertain global climate and cut-throat competition in China, hence triggering panic among domestic banks for potential loan defaults.

Insiders disclosed that DRAM and TFT-LCD panel manufacturers, some of whom are in financial woes, owe banks over NT$100 billion (US$3.33 billion) as of the end of last month.

Taking after memory chipmaker ProMos Technologies Inc., Powerchip Semiconductor has recently applied for one more year of financial relief from the Industrial Development Bureau (IDB) under the Ministry of Economic Affairs (MOEA), with such trend spreading among DRAM makers.

ProMos is a comprehensive memory solution provider in Taiwan who owes NT$39.1 billion (US$1.3 billion) to eight government-linked banks, which reportedly scored profits of NT$60.35 billion (US$2.01 billion) in the first 10 months. If ProMos defaults, the banks may have to use over half of their profits to erase the bad loans.

Powerchip owes over 20 banks some NT$50 billion (US$1.67 billion) as of the end of October. Acknowledging the situation of the debtor, some lenders are said ready to set aside provisions to write off the possible default.