Taiwan DRAM Makers Face Losses From Qimonda

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Two Taiwanese DRAM makers face losses related to German chip giant Qimonda's bankruptcy filing, an example of how the downfall of a one company can ripple across the globe.

Inotera Memories, formerly a joint venture between Qimonda and Taiwan's Nanya Technology, has already decided to give up on the idea of collecting NT$3.4 billion (US$101 million) owed by Qimonda. The Taiwanese company will also stop supplying DRAM chips to Qimonda, Inotera said in a statement to the Taiwan Stock Exchange.

Inotera had been contracted to provide the chips to Qimonda as part of the joint venture. Last year, Micron Technology of the Boise, Idaho, bought out Qimonda's stake in the joint venture.

Taiwan's Winbond Electronics faces the loss of its technology partner and nearly a third of its revenue should Qimonda fail to re-emerge from bankruptcy.

The German memory chip maker owes Winbond NT$950 million in back payments for DRAM, the Taiwanese company said in a statement to the Taiwan Stock Exchange on Saturday. Qimonda also bought nearly a third of Winbond's output each month, chips that Winbond will have to find a new way to sell.

Winbond also relied on Qimonda for DRAM production technology. The two companies signed a deal years ago for Winbond to license Qimonda's production technology in return for cash and chips. The deal helped Qimonda by giving it an inexpensive supply of DRAM to sell globally and enabled it to avoid building expensive new DRAM factories.

Winbond said it does not face a technology problem for now. The company has already started mass production using advanced 65-nanometer technology transferred from Qimonda, new technology it will be able to use for a few years. The company will have to find a new technology partner should Qimonda ultimately fail.

Qimonda filed for bankruptcy protection in German last Friday after a €325 million (US$422.5 million) financing package involving the German state of Saxony, a Portuguese financial institution and Qimonda's parent company, Infineon Technologies, could not be completed in time.

The global DRAM market meltdown, which started long before the worldwide financial crisis, has kept prices near or below the cost of manufacturing for over a year and caused companies to post massive losses. The economic downturn added to DRAM makers' woes late last year by further eroding demand and making it more difficult to find loans necessary to pay for expensive production line upgrades.

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