FPG denies talking to government on consolidation of DRAM firms: report

The China Post news staff

The head of Formosa Plastics Group’s (FPG’s) DRAM arm yesterday denied reports of the conglomerate negotiating with the government on plans to consolidate Taiwan’s DRAM firms through cooperation with U.S. firm Micron, according to a local newspaper.

“No one will say things like that to the Ministry of Economic Affairs (MOEA), not at least when I am the president,” said Nanya Technology Corporation (南亞科技) President Wu Chia-chau (吳嘉昭), stressing that the FPG will not be taking the lead in discussions of DRAM consolidation under the current circumstances. Elpida, the world’s No. 3 DRAM (dynamic random access memory) maker, announced on Monday that it had filed for reorganization proceedings with the Tokyo District Court and that its petition had been accepted. Faced with debts of around 448 billion Japanese yen (US$5.56 billion), the company will now try to restructure its business under the oversight of the Tokyo District Court and a court-appointed supervisory and review committee.

Any drop in Elpida’s output as a result of the action could ease the supply glut in the DRAM market. The MOEA said yesterday it would continue to push for the consolidation of the nation’s memory chip-makers with Elpida, according to the Associated Press. The ministry said in a statement that U.S. chip-maker Micron Technology Inc. is expected to continue to play a key part in the consolidation, which may include Elpida if the Japanese firm is restructured after bankruptcy. Elpida and Micron have discussed consolidation with the six Taiwanese DRAM makers for months to head off competition from South Korea’s Samsung Electronics Co. Samsung and another South Korean maker, Hynix Semiconductor, together control more than 60 percent of the world memory chip market, according to marketing firm TrendForce Corp. Nanya has had years of technical cooperation with Micron Technology. The two established Inotera Memories Inc. (華亞科技) in a 2003 joint venture. Taiwan’s Fair Commission yesterday approved the Inotera merger, officially allowing Micron to gain further control of Inotera.

After the bankruptcy filing, the spot price of the benchmark DDR3 2-gigabit DRAMs rose more than 16 percent on Tuesday, triggering buying in Nanya and Inotera shares when the Taiwan stock exchange resumed trading after a long weekend.

As of 11:42 a.m., Nanya shares had risen the maximum daily allowable 7 percent to NT$4.17 (US$0.14) with 1.51 million shares changing hands, while Inotera shares also added 7 percent to NT$8.04 on trading volume of 7.87 million shares.

Morgan Stanley MUFG Securities yesterday identified Inotera and Winbond Electronics (華邦電子) as the two Taiwanese DRAM makers to benefit from the Elpida’s bankruptcy protection filing. South Korean players will gain more bargaining power in the mobile memory chip market, according to the bank’s forecast.