Taiwan vows to develop new memory chips

Taiwan Memory, the company newly established by the government to restructure Taiwan's struggling D-ram sector, will partner with Japan's Elpida to develop new uses for the memory chip, such as bringing it to mobile phones.

John Hsuan, Taiwan Memory chairman, on Wednesday laid out the company's plans for the first time, which includes the ambitious goal of creating new markets for D-ram. The memory chip, first developed 16 years ago, is a key component in personal computers but has now become a commoditised product, which has meant thin profit margins for its producers.

Mr Hsuan vowed to change that by developing new versions of D-ram that could be either used in other products, such as mobile phones, or would otherwise have new, distinguishing capabilities. D-ram should no longer be “just a socket replacement”, he said.

Should Taiwan Memory succeed in developing mobile D-ram, it would present a challenge to Flash memory makers such as Japan's Toshiba. Flash chips are currently largely used in mobile phones and digital cameras.

Under the partnership, Elpida would transfer intellectual property rights and key research and development staff to Taiwan Memory. In exchange, the Taiwan government may inject capital to the world No.3 D-ram maker, said Mr Hsuan, who declined to give further details as “there is still a long way to translating this general picture to a concrete contract”.

Taiwan Memory will look to hire a team of 800 researchers and designers, but will not have any production capabilities. Instead it will contract local Taiwanese manufacturers to produce products using the newly developed technology, which Taiwan Memory would then sell to its customers. “Taiwan Memory will retain control of the product,” he said.

Mr Hsuan said US-based Micron, the world's fourth biggest D-ram maker and a competitor to Elpida, has also expressed interested in joining Taiwan Memory's development efforts. Micron, however, still needs approval to do so from its Taiwanese partner Nanya, with whom it already has a joint venture.

The plan falls short of a widely expected bailout for domestic Taiwan D-ram makers, although Mr Hsuan said the industry as a whole would benefit should his company, in which the government has pledged to hold a minority stake, succeeds in pioneering new products.

“I was not given industry consolidation as my mission and I have no interest in it,” Mr Hsuan said, “This is something that Taiwan needs for the long term.”