Taiwan restructures ailing DRAM sector: report

The Taiwanese government will fund a new initiative to help transform the nation's dynamic random-access memory (DRAM) chip industry.

The government has formed a new company - the Taiwan Memory Company (TMC) - to support this goal, the Financial Times said.

TMC will buy key technology from foreign vendors, making it easy for Taiwanese manufacturers to develop products with both local and international components. TMC will also help facilitate an alliance of Taiwanese DRAM producers, which could threaten Samsung's market dominance.

Their bottom-lines hit by falling demand for DRAM chips, US-based Micron and Japanese-based Elpida have both approached the government for aid, FT said. Both manufacture DRAM in Taiwan, and have joint ventures with Taiwanese companies.

The global DRAM chip industry was worth $23.6 billion last year. But DRAM suppliers lost more than $13 billion in 2007 and in 2008, with some DRAM companies starting to go bankrupt, Gartner said.

The research firm predicts worldwide chip sales will shrink 24% to $194.5 billion this year.

"After the 2001 recession, in which semiconductor sales plummeted by a record 32.5 percent, semiconductor sales took about four years to get back to 2000 levels," said Bryan Lewis, research vice president at Gartner.