Faced with a disastrous downturn in a vital industry, chip making, Taiwan is experimenting with a novel way to try to save it.
With at least two leading chip manufacturers teetering on the edge of bankruptcy, the government in recent weeks has introduced the broad outlines of a plan to create a new entity, called Taiwan Memory, to support production. It aims to balance concern about taxpayers’ wrath over the use of public money against the threat of a banking crisis and anger over thousands of lost jobs if one or more of the companies fail.
“This is one of the clear motivations when the government is looking at the DRAM sector,” said Tony Phoo, a Taipei-based economist with Standard Chartered, referring to dynamic random access memory chips, which are used in a range of popular consumer electronics products. “It wants to prevent this from morphing into something that could get out of hand and have serious repercussions.”
Under the plan, the government hopes to invest 30 billion Taiwan dollars, or about $870 million, in the venture, and will limit its stake to less than 50 percent. It wants private investors, including at least some of the six main DRAM manufacturers in the country, to own the rest, though the terms of their involvement have not been detailed.
John Hsuan, a chip industry veteran tapped to lead the new company, told reporters that the government did not intend to merge the six companies, and that it would not immediately bail out individual manufacturers.
“The purpose of Taiwan Memory is to make Taiwan’s DRAM industry more competitive,” he was quoted as saying by local news media.
But analysts say some consolidation may be needed to help the chip makers weather the economic crisis and to deal with competition from giant South Korean rivals like Hynix Semiconductor and…