Taiwan’s new DRAM outfit TMC ties up with Japan’s Elpida

Taiwan Memory Company, a new government-backed firm set up to consolidate the island's ailing memory-chip industry, said last week that it would form a partnership with Japan's Elpida Memory Inc to supply technology. In a statement, it said the US semiconductor company Micron Technology Inc had also expressed "strong" interest in a tie-up, and TMC had not closed that option. ''The company is still discussing with the two companies the pertinent details," it said.

Last month, Taiwan had announced the formation of the TMC to spearhead its efforts to consolidate the island's struggling DRAM chip sector into a single company that could compete with global giants such as Korea's Samsung and Hynix, which have received bailouts from the South Korean government.

However, earlier this month Micron, the world's fourth biggest DRAM maker, said it had ''decided not to participate in TMC as it is currently structured''. At the same time Nanya Technology, its Taiwan partner, asked for ''the same support from the government'' that Taiwan Memory will receive.

Elpida is the world's third largest maker of DRAM chips, used in mobile phones, computers and home electronics. It is also in trouble and has reportedly sought $500 million in public funds. It has also announced a decision to double the prices and slash production. In Taiwan, it already has a joint venture with Powerchip Semiconductor Corp.

The TMC tie-up will aim to secure badly needed core technologies and consolidate the local industry to upgrade the island's competitiveness in the DRAM (dynamic random access memory) chip market, the economics ministry said. Taiwan had announced industry veteran John Hsuan, honorary vice chairman of Taiwan's United Microelectronics Corp, as the TMC chief. Government investment would not exceed 50 per cent, had said.

The proposal to form TMC as an independent entity is aimed at restructuring rather than bailing out existing cash-strapped chipmakers. But some industry insiders in Taiwan have commented that the government's use of public funds in such a way is unfair, as not all of Taiwan's struggling DRAM players will be treated equally.

(Also see: Taiwan looking to inject $864 million in new DRAM company Taiwan Memory)