Micron, Nanya Tech agree tech license, chip JV: sources

TAIPEI Thu Feb 21, 2008 6:50am EST

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TAIPEI (Reuters) - U.S. chip maker Micron Technology MU.N and Taiwan's Nanya Technology (2408.TW) have signed a licensing agreement and are discussing a chip joint venture, sources from both firms said, in a bid to lower production costs.

Analysts said an alliance between the No.1 U.S. chip maker and Taiwan's No. 2 comes at the right time, as the market for computer chips is poised to recover in the second half of the year. The companies signed an agreement earlier this month, the sources at the two firms told Reuters Insight, a unit of Reuters RTR.L.

Nanya Technology Vice President Pai Pei-lin denied on Thursday that an agreement had been signed, and the company said it was in talks on possible cooperation with makers of dynamic random access memory (DRAM) chips, the mainstay of computer memory chips.

The sources said the first stage of the tie-up, which could be finalized next month, would include licensing of 1 gigabit, 68 nanometer technology for a new Nanya Tech chipmaking plant. The facility will start production of the new chips in the third quarter of this year.

"That will be positive to the two individual companies but it seems we won't see reduction of output from their cooperation," said Brent Lin, a fund manager at Taiwan's Capital Investment Trust.

But Lin added that there would be little impact on supply and demand in the sector in the short term.

The DRAM industry has been battered by tumbling prices that pushed many major players, including Micron and Nanya Technology, into the red.

Analysts expect the DRAM chip market to rebound in the second half of the year after corporate computer replacement kicks in.

A Micron spokesman was not immediately available for comment.

Nanya Tech shares closed up 1.4 percent on Thursday, lagging the main TAIEX share index's .TWII 2.4 percent gain.

The deal would be the latest in a string of alliances between top players in developed markets who are looking to Taiwan for its lower production costs and manufacturing expertise.

Nanya is in a similar tie-up with Qimonda QI.N, about 77 percent-owned by Infineon (IFXGn.DE). And about a year ago, Japanese memory chip maker Elpida 6665.T entered a similar alliance with Nanya's cross-town rival, Powerchip Semiconductor 5346.TWO.

The latest tie-up could see Micron replace Qimonda as Nanya Tech's advanced technology partner, a Nanya Tech source said.

Sector leader Samsung Electronics (005930.KS) has said it expected a global oversupply of computer chips and lower prices to last through the first half of the year, but market conditions should change dramatically in the second half.

(US$1=T$31.5)

(Reporting by Baker Li; Editing by Doug Young and Louise Heavens)

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