PSC, Elpida Move to Consolidate Amid Absence of Gov't Rescue Plan

Taipei, March 12, 2009 (CENS)--Top executives of PowerChip Semiconductor Corp. (PSC) and Elpida Memory Inc. met recently to discus the plan to consolidate the two DRAM chipmakers as the first step to save them on their own, following an announcement that shatters their hope for government rescue.

PSC Chairman Frank Huang and his Elpida counterpart, Yuki Sakamoto, met on March 10 to evaluate plans to consolidate the DRAM chipmakers through merger or stock swap. The meeting came shortly after John Hsuan, head of an office preparing for the establishment of a government-backed DRAM company christened Taiwan Memory Co. (TMC), announced the DRAM company will not consolidate with any local DRAM chipmaker, suggesting the government will not finance Taiwan's financially-struggling DRAM chipmakers.

Hsuan, a former vice president of foundry United Microelectronics Corp. (UMC), reasoned that the combination would bring the new company excessive production capacity, which he said would be a liability rather than an asset to the new company and the government. In addition, no signs of recovery has loomed up in the industry.

He suggested the struggling DRAM chipmakers solve their huge loss and debt on their own, instead of counting on TMC to offer rescues. "A properly conducted self-salvation package is much more helpful than founding a TMC," he stressed. He noted that the company's resource is quite limited while the Taiwan industry is saddled with a debt totaling NT$400 billion (US$11 billion at US$1:NT$35) as a whole.

On hearing Hsuan's announcement, Sakamoto flew to Taiwan in no time to meet with Huang. The two executives planned to consolidate PSC and Elpida, with joint venture Rexchip Electronics Corp. playing the role of the consolidation platform. They noted Rexchip owns the world's best technology and equipment for making DRAM chips.

The two companies will hold a joint press conference next Wednesday to announce their conclusion on the consolidation plan.

Economy Minister C.M. Yiin yesterday said owners of the island's DRAM companies should be held responsible for saving their companies on their own since they have been paid so heftily and TMC would not compete with them for the time being as it does not have factory now. He stressed the new venture would first focus on technology and product research and development before it furnishes itself with manufacturing capability.