SAN JOSE, Calif. -- Is the proposed consolidated memory venture in Taiwan already falling apart?
One Taiwan DRAM maker, Nanya Technology Corp., has not committed to the proposed memory venture and is still evaluating the concept. Reports have surfaced that another vendor, Powerchip Semiconductor Corp., is unhappy with the government proposal and will merge its operations with Elpida Memory Inc.
And the Taiwan government appears to be changing its tune about the venture. As reported last week, the Taiwan government said it would consolidate all of its DRAM makers and form a new company, dubbed Taiwan Memory Co. Taiwan's DRAM makers include Nanya, Inotera, Powerchip, Rexchip, ProMOS and Winbond.
The Taiwan government will pour $2 billion in the venture, but it will own less than 50 percent of Taiwan Memory, according to reports. The entity will form a partnership with ''either'' Elpida or Micron, according to reports.
Now, after just a week, there could be a slight change in plan. The Taiwan government has ruled out a ''state-led merger'' of the island's DRAM makers, according to Bloomberg. Instead, the venture ''will focus on obtaining technologies and then look for existing plants in Taiwan for manufacturing needs,'' according to the report, which cited Economic Affairs Minister Yiin Chii-ming as its source.
It's hard to believe that Taiwan's DRAM makers will cooperate with this or any other government plan. In fact, they will most likely dismiss any government proposal.
''I would not be surprised if (Taiwan Memory) falls apart,'' said Jim Handy, an analyst with Objective Analysis (Los Gatos, Calif.).
It will be difficult for the Taiwan government to consolidate the island's memory players, compared to what Korea did several years ago. In 1998, the Korean government forced two memory makers, Hyundai (now Hynix Semiconductor Inc.) and LG Semicon, to merge. ''That was a tough merger,'' Handy said.
''There is less government pressure in Taiwan,'' as compared to Korea, Handy said. ''The Taiwan government cannot tell what the companies to do. But (if Taiwan Memory fails), then the question is where do Taiwan's DRAM makers go from there?''
Indeed, all DRAM makers, including those in Taiwan, are losing money. The Taiwan players may be forced to consolidate--or get acquired--amid an ongoing downturn in DRAMs, he said. "It's a horrible business,'' he added.