Taiwan's economic affairs minister has retreated from previous statements that suggested a merger of the country's ailing memory chipmakers was likely, saying it's "too complicated," according to reports.
Instead, Taiwan Memory Co., the new government-backed entity, will focus on acquiring technologies and tapping existing manufacturing plants in Taiwan, according to a Bloomberg report.
Economic affairs minister Yiin Chii-ming and John Hsuan, a former United Microelectronics Corp. executive who was appointed by the state to oversee the formation of Taiwan Memory, are also saying that the scale of the aid plans will be pared back, Bloomberg said. This is a departure from previous statements that suggested a massive consolidation of the six loss-ridden memory chipmakers was likely.
"It is wrong to assume we would take in these companies with all their debts and problems," Bloomberg reported, citing an interview with Chen Chao-yih, head of the economic ministry's industrial development bureau. The six companies have combined debt of about $11 billion.
Taiwan's memory chipmakers lost a combined $12.5 billion in 2007 and 2008, highlighting the dire straits--including bankruptcies, widespread plant closings, and layoffs--that the memory chip industry is in worldwide.
The six companies are: Nanya Technology, Inotera Memories, Powerchip Semiconductor, Rexchip Electronics, ProMOS Technologies, and Winbond Electronics.
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.
Micron Technology announced Sunday that it is buying Qimonda AG's $400 million stake in Inotera Memories.
Inotera was founded as a joint venture by Qimonda (formerly the memory products division of Infineon Technologies) and Nanya Technology. Micron said the deal constitutes an expansion of its relationship with Nanya.
In the current Qimonda-Nanya partnership, Inotera operates two 300-millimeter wafer fabrication facilities producing a total of 120,000 wafers per month, Micron said.
Under the agreement, Micron will acquire access to half of the manufacturing capacity of Inotera, with the other half allocated to Nanya. Micron said it will also share its Stack DRAM technology with Inotera for the production of Stack DRAM products for Micron and Nanya.
The stake in Inotera will improve the Boise, Idaho memory chipmaker's economies of scale. "Micron will gain greater scale in DRAM, reduce our operating expenses per wafer and have access to a very cost competitive operation," Micron Chairman and CEO Steve Appleton said in a statement.
The transaction will be completed in two stages, with Micron purchasing half of Qimonda's stake, or about 18 percent of Inotera, for $200 million in cash within approximately the next week--subject to certain government approvals and other customary conditions. The remaining 18 percent stake in Inotera will be acquired upon receipt of Taiwan Federal Trade Commission approval and other customary conditions, Micron said.
Following the acquisition, Qimonda's share of Inotera's capacity will be ramped down over a period of months, according to Micron.
Micron expects to restructure the previously-announced MeiYa joint venture with Nanya. "It is anticipated that both parties will cease future resource commitments to MeiYa and redirect those resources to Inotera," Micron said.
To help fund the purchase price, Micron has obtained $285 million in term loan financing commitments from strategic sources at favorable terms.
This agreement follows an October 9 announcement in which Micron said it would reduce its global workforce by approximately 15 percent during the next two years as it scales back flash memory chip production in Boise, Idaho.
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