| TAIPEI, March 9
TAIPEI, March 9 Taiwan is setting up a new
company to pull together six struggling computer memory chip
makers and bring in technology from Japan's Elpida 6665.T or
U.S.-based Micron MU.N in a sector suffering from its worst
The government expects the move to fend off the industry's
dominant players, Samsung Electronics (005930.KS) and Hynix
Semiconductor (000660.KS) of South Korea. [ID:nSEO107706]
Following are answers to key questions about the market for
DRAM or dynamic random access memory:
WHAT DOES THIS MEAN FOR THE GLOBAL INDUSTRY?
The consolidation led by Taiwan will leave the $25 billion
sector with four major DRAM makers globally -- Samsung, Hynix,
"Taiwan Memory Co" and one other company that would be left out
of the Taiwan consolidation (either Micron or Elpida).
The reshaped landscape might help Taiwanese suppliers --
which make nearly a quarter of all the world's DRAM memory
chips -- to get a stronger grip on output, especially after
companies recklessly built up output in the last many years.
Elpida may need funds before the Taiwan plan can be
WHAT IS THE OUTLOOK FOR TAIWANESE CHIPMAKERS?
There's likely to be no impact in the short term because it
will take about six months to set up the new company, while
chipmakers, including ProMOS 5387.TWO and Powerchip
5346.TWO are still strapped for funds.
The government did not give any specifics on how the new
company can bring local DRAM makers together, but any
de-listing of a company in such a consolidation could face
opposition from shareholders.
In the long term, some analysts say this move might force
some of the debt-ridden chipmakers to consolidate their
capacity into the new company. Taiwan Memory Co could become a
centralised foundry and DRAM makers would diversify into sales
The six chipmakers to be involved in the plan are:
Powerchip, Nanya Technology (2408.TW), ProMOS, Inotera Memories
3474.TW -- joint venture between Nanya and Micron -- and
Rexchip, unlisted joint venture between Powerchip and Elpida.
Shares of Powerchip, Nanya Technology both fell more than 5
percent on Friday and declined further on Monday.
IS THIS A CHANCE OR THREAT FOR SAMSUNG, HYNIX?
Benefiting from more advanced production technologies,
Korean makers such as Samsung and Hynix could further tighten
their grip on the industry, while Taiwan Memory struggles to
slowly integrate several companies and technologies into one
Taiwan Memory could end up becoming a formidable threat to
No. 2 Hynix, which may have to seek more funding for technology
Still, analysts say whether Taiwan's government can inject
more funds into Taiwan Memory remains a question.
WHAT IS THE OUTLOOK FOR DRAM PRICES?
Even after the government's move, any significant recovery
in memory chip prices is unlikely in the short term.
So far this year, memory chip prices have been flat but
slumpedabout 50 percent in the fourth quarter of last year as a
global economic slowdown hurt spending on personal computers
and other gadgets that use memory chips to store data.
Analysts' forecasts for global PC shipments in 2009 vary,
but many expect sales to fall. Research firm IDC expects PC
shipments to drop 4.5 percent this year.
(Additional reporting by Marie-France Han and Rhee So-eui in
SEOUL and Sachi Izumi in TOKYO; Editing by Anshuman Daga)