Report: Taiwan to overhaul memory chip industry

Taiwan named a chip industry veteran to head a state-backed company that will merge six memory chipmakers, following pleas from domestic companies desperate for financial aid.

Previous reports had cited an approval for loans, but on Thursday the economic affairs ministry took this a step further and named former United Microelectronics Corp. executive John Hsuan to head a state-backed company, according to Bloomberg. Taiwan's government will hold less than a 50 percent stake.

Taiwan Memory Co. will be established within six months. It has not been decided yet what role Japan's Elpida Memory or U.S.-based Micron Technology would play, according to the report. One of these two memory chipmakers could either collaborate with the merged companies or become part of the new entity.

At stake is Taiwan's dynamic random access memory (DRAM) industry. DRAM is the main memory used in personal computers. While all memory chipmakers have been suffering, Taiwan's DRAM industry has been falling further and further behind market leaders Samsung and Micron and posting big losses.

The Taiwan-based companies are Nanya Technology, Inotera Memories, Powerchip Semiconductor, Rexchip Electronics, ProMOS Technologies, and Winbond Electronics.

The companies posted combined losses $12.5 billion in 2007 and 2008, Bloomberg said.