Taiwan Memory to Reveal Business Plan, Partnerships Soon

Taiwan Memory Company (TMC), the government sponsored memory company designed to take over its debt-ridden DRAM makers, plans to reveal its business plan very soon, a government official confirmed.

The chip company, which will be part-owned by the Taiwan government, has already agreed to work with Japan's Elpida Memory on technology and says it hopes to become a research and development powerhouse.

"There have been a lot of discussions and there will be an announcement very soon," said Leu Jang-hwa, director of the Information Technology Industries Division at Taiwan's Industrial Development Bureau.

Plans in the works include a potential deal for the Japanese government to invest in TMC as well as several private companies and investors, he said, but nothing has been finalized.

Taiwanese chip assembly giant Siliconware Precision Industries may be interested in investing in TMC but the company has not yet thoroughly looked into the option, said Janet Chen, a company representative.

Over-investment in new production facilities and a global recession have hurt DRAM makers over the past several quarters. TMC was conceived of to restructure Taiwan's DRAM industry. DRAM companies on the island hold over NT$430 billion (US$13.14 billion) in debt, mainly to Taiwanese banks, and a few are in danger of running out of cash or defaulting on debt. The government also wants TMC to beef up the technology prowess of Taiwanese memory chip makers, which had been manufacturing chips using technology from foreign companies. It has pledged to back TMC with at least NT$30 billion.

Leu said Taiwanese DRAM makers will have to decide on their own whether or not they want to join TMC because the government won't force them and also won't bail them out of their problems. "They're on their own," he said.

Several reports about TMC have surfaced recently, including that the company may only ask the government for NT$10 billion; that it buy out a few Taiwanese DRAM research companies, and that it may take a 10 percent stake in Japan's Elpida Memory, an issue first raised in April.

In fact, no less than seven media outlets have reported the 10 percent deal with Elpida, many quoting the head of the Industrial Development Bureau, Woody Duh [CQ]. But the bureau's spokesman on the TMC issue, Lu Cheng-chin, said TMC's business plan has not yet been submitted to the bureau, so it's impossible to say whether a stake in Elpida is part of the plan or not.

Officials expect TMC's business plan to be announced within the next two weeks.

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