Elpida Chip Deal With Three Taiwanese Makers a No Show

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Elpida Memory, Japan's largest DRAM maker, remains in tie-up talks with three Taiwanese DRAM makers, but no deal will be announced today, a company spokesperson said Wednesday.

The comment was in response to a reportin the Japanese business daily Nikkei that said an agreement between the companies would be signed today in Taiwan.

The potential deal involves a four way tie-up between Taiwan's Powerchip Semiconductor and ProMOS Technologies, as well as a joint venture between Elpida and Powerchip named Rexchip Electronics, which is also based in Taiwan.

The companies began discussions due to an industry-wide downturn that shot down the price of DRAM chips and sent all the companies into financial losses. The global recession has hurt companies more by making loans harder to come by. Last month, German DRAM maker Qimonda filed for bankruptcy protection there, and more DRAM makers could soon follow.

Elpida has been in discussions with the three Taiwanese companies "for the last month or so, but we haven't reached any agreement as of this moment," said Kumi Higuchi, vice president of communications at Elpida.

Elpida's CEO, Yukio Sakamoto is in Taiwan for talks with Powerchip today, she said. But Elpida does not expect to sign any agreements in the near term.

In fact, Elpida will wait until the end of this month before making any new moves because that's when the Taiwan government will publish guidelines for applying for loans or other grants that are part of a special budget to help companies on the island.

Elpida will consider applying for money from the Taiwan government as well as the Japanese government if a new law to aid companies being discussed there passes.

The chip maker wants to see details of the government plans first, Higuchi said.

Any decision by Elpida to invest in or tie-up with a Taiwanese DRAM maker will hinge on government funding.

A spokesman from Powerchip, Eric Tang, said there has been no new progress so far in discussions with Elpida.

Last Friday, Elpida announced its biggest loss so far amid the downturn. The company's net loss widened to ¥72.3 billion (US$804 million) in the final three months of last year, compared to a loss of ¥12.1 billion during the same time a year earlier. The chip maker blamed a sharp, 50 percent quarter-on-quarter drop in the price of mainstream DRAM as a main culprit for its loss, but also said slower demand for high end DRAM and a stronger Japanese currency also hurt its earnings.

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