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Qimonda, Nanya Finalizing Plans to End DRAM Joint Venture

Memory chip maker Qimonda and partner Nanya Technology are nearing a deal to end their joint venture in Taiwan, representatives of the companies confirmed Friday.

The two companies joined a few years ago to build Inotera Memories, a Taiwanese DRAM maker that operates some of the most advanced chip factories in the world. But a tough DRAM market and disagreements on future technology development have derailed their future plans.

"We have already agreed in principle on a number of important details, for example with respect to the timeframe, capacity profile and transfer price principles that will apply once we have reached a final agreement on dissolving the joint venture," said Ralph Heinrich, senior manager of public relations at Qimonda, in an e-mail. "We have also agreed on a framework for arriving at a final decision on Inotera's future ownership. But this is all that we can comment on now."

A Nanya Technology representative said the talks were nearly complete.

There are a few reasons the joint venture is ending, analysts say. First, Qimonda needs to beef up its cash reserves in a tough DRAM market. The German chip maker reported a net loss of €401 million (US$629 million) in the quarter ended June 30, its fifth straight quarterly loss. The company has reported a net loss of €1.48 billion over the past nine months.

Average DRAM selling prices fell 45 percent during the most recent quarter, Qimonda said, which is the same problem all DRAM makers have these days. A memory chip glut has sent prices down below the cost of production.

Qimonda's parent company, Infineon Technologies, is also part of the scenario. The company still owns a 77.5 percent stake in Qimonda and is in talks to sell off that stake to private investors or another company. The sale of Qimonda would call Inotera's future expansion into question.

Meanwhile, Nanya Technology has recently agreed to a technology development pact with Micron Technology of Boise, Idaho. The two companies also plan to build a joint venture DRAM company in Taiwan named MeiYa Technology.

Analysts have speculated that Micron and Nanya might scrap plans to build MeiYa and instead buy out the Inotera stake. The Nanya representative declined to comment on this idea. A Micron spokesman also declined comment.

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