Taiwanese Companies to Loan DRAM Maker Micron US$285M

Two members of Taiwan's Formosa Plastics Group plan to loan US$285 million to DRAM maker Micron Technology to strengthen a new joint venture with the U.S. company and speed up the development of advanced chip manufacturing lines, the companies said.

The cash is part of a global shuffling of DRAM market players amid a chip downturn that has lasted well over a year. Long before fears of a global recession crept into the news, most DRAM makers were losing money due to a chip glut, and prices of mainstream DRAM chips are below their manufacturing cost now. The credit crunch has worsened the situation for DRAM makers by making loans harder to come by.

The Taiwanese loan money is earmarked to help Micron pay US$400 million in cash to buy Germany's Qimonda AG out of a joint venture with Taiwanese DRAM maker Nanya Technology.

In that deal, Micron will gain a 35.6 percent stake in Inotera Memories, which Qimonda and Nanya jointly built.

Nan Ya Plastics, a plastics maker in the Formosa Plastics Group that has invested heavily in DRAM through Nanya Technology, will loan Micron $200 million, Nan Ya said in a statement to the Taiwan Stock Exchange late Tuesday.

Inotera Memories will loan Micron $85 million, it said in a separate filing to the exchange.

Taiwanese DRAM makers have been the focus of a host of global DRAM deals recently.

Earlier this month, Japan's Elpida Memories said it was considering taking over a joint venture it runs with Taiwan's Powerchip Semiconductor. Such a move would make Rexchip Electronics an Elpida subsidiary. The Japanese company also talked up expanding its alliance with Powerchip, including a possible cash injection.

South Korea's Hynix Semiconductor has offered cash help to its Taiwanese partner, ProMOS Technologies. Hynix agreed to buy 8 to 10 percent of ProMOS's outstanding stock shares earlier this year.

Analysts view Nanya Technology as the safest DRAM maker in Taiwan for investment because it is a member of the Formosa Plastics Group, one of Taiwan's largest industrial conglomerates. Being part of the group means Nanya can raise money when it needs to more easily than other Taiwanese DRAM makers.

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