A memory chip glut caused DRAM companies globally to start posting losses nearly two years ago and their problems have worsened with the global recession. Although companies have cut back on chip production and shut older factories, falling demand for PCs, where most DRAM chips go, have further hurt the market, and new loans to finance factory improvements have become difficult to obtain.
Earlier this year, Taiwanese officials said they had to do something about their DRAM makers because they hold so much debt, an estimated NT$430 billion, much of it owed to Taiwanese banks. A DRAM default could add to woes to the island's financial industry.
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