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April 9, 2009 11:34 am

Micron rules out joining Taiwan D-Ram plan

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Battle lines were drawn across the global D-ram memory chip industry on Thursday as Micron of the US and its Taiwanese partner ruled out joining the Taiwan government's industry restructuring plan, centred around the new established Taiwan Memory Company.

Micron, the world's fourth biggest D-Ram maker, said it had “decided not to participate in TMC as it is currently structured”. At the same time Nanya Technology, its Taiwan partner, asked for “the same support from the [Taiwan] government” that Taiwan Memory will receive.

Nanya said it was working to transfer advanced foreign D-Ram technology to Taiwan - the task allocated to Taiwan Memory under the restructuring plan.

Micron's announcement all but rules out further significant consolidation in an industry that suffered its worst-ever crisis last year because of overcapacity. Makers of D-Rams, which are primarily used in PCs, have accumulated some $10bn in losses since prices crashed last year, causing the bankruptcy of Germany's Qimonda and the near-collapse of Taiwan's ProMOS.

The crisis prompted the Taiwan government to set up Taiwan Memory to develop new uses for D-Ram and to create home-grown technology. John Hsuan, Taiwan Memory chairman, said last week that his company would set up a technology partnership with Japan's Elpida, and that the Taiwan government was considering injecting capital into Elpida.

Mr Hsuan had also held out the possibility that Micron would join in. “When you have enough resources to work with both, then that is a bonus,” he said.

Now the D-Ram industry, which managed $24bn in revenues last year despite the downturn, will be split into four major groups. They are South Korea's Samsung and Hynix, which are the top two global producers, Japan's Elpida and TMC, and Micron and its allies.

Wu Jiazhao, Nanya chairman, said Nanya's strategy was “very clear already” and involved a long-established process of transferring technology from Micron. “Without our own technology, we would not have been able to stay in this business,” he said.

Like Taiwan Memory, Nanya aims to move into more specialised D-Ram production, which is technically advanced but yields higher margins for producers. Mr Wu said Nanya hoped to develop its own D-Ram models by 2012. he said original research was expensive, but the process could be accelerated with assistance from the government.

“We need the government's assistance, not its rescue,” said Charles Kau, chief executive of Inotera, the joint venture between Nanya and Micron.

Mr Wu said Nanya and Inotera would approach the Formosa group, Nanya's parent company and one of Taiwan's biggest conglomerates, for a capital injection. Analysts estimate that Nanya and Inotera have a combined $800m in debt due next year and would need additional funding to meet those commitments.

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