13 January 2009—Suffering from a glut of production capacity, slumping demand, and enormous debt, Taiwan’s DRAM industry is looking to its government for a rescue. Who will get how much money won’t be known until early February, but one thing is clear: The Taiwanese government is making the acquisition of critical technology a main condition for the bailout.
”We’ve discussed future directions with local DRAM makers, stressing that acquiring key technologies from foreign partners is the top priority,” Premier Liu Chao-shiuan said at a press conference on 30 December.
The global DRAM industry got into this predicament because it engaged in a production-capacity arms race that led to oversupply and falling prices just as demand for its products weakened. Taiwan, which has 22 percent of the global DRAM market, was a big participant in that arms race. Total investment in the island’s 11 operating 12-inch DRAM plants over the past decade exceeds NT$850 billion (US $25.754 billion), according to Taiwan’s Ministry of Economic Affairs (MOEA). But now those investments are becoming losses. As of November 2008, the collective debt of Nanya Technology, Inotera Memories, Powerchip Semiconductor, and Winbond stood at NT$431 billion.
In mid-December, the MOEA mapped out strategies to prop up the struggling DRAM industry. The ministry’s short-term plan aims to help DRAM makers extend their loans and adjust terms of payment. Long-term plans encourage consolidation, including both mergers of local DRAM makers and government-backed collaborative R&D.
According to Chao-Yih Chen, director general of the Industrial Development Bureau under the MOEA, local DRAM firms that seek the government’s assistance for their collaboration with foreign enterprises would have to make sure their partners’ intellectual property could be acquired and that an independent innovation capability could be built. ”Why should the government bail local DRAM makers out if they are reluctant to enhance independent innovation capability?” Chen said at a press conference on 6 January.
Some key technologies that Taiwanese DRAM makers would like to acquire from foreign partners include processes for making transistors and components with features smaller than 50 nanometers, for use in the newest variety of DRAM—DDR3 SDRAM (double-data-rate three synchronous dynamic random access memory)—and for use in NAND flash memory fabrication. With such technologies acquired overseas, local makers believe they could develop more-advanced technologies, such as a 35-nm process, within five years.