Taiwan's DRAM makers have faced tough times amid the global recession due to slumping demand for their chips, which are mainly used in computers. Over-investment in new factories a few years ago caused a chip glut, leading to falling DRAM prices and mounting losses for producers. Most Taiwanese DRAM makers have reported continuous losses since the middle of 2007.
DRAM prices remain low, hindering the ability of companies to make money.
Taiwan's five biggest DRAM makers reported a combined net loss of NT$159.49 billion last year, more than a four-fold increase over a net loss of NT$36.99 billion in 2007, according to data companies filed to the Taiwan Stock Exchange. Revenue in 2008 totaled NT$179.17 billion, down from NT$255.94 billion.
Last month, the company chosen by Taiwan Memory Company (TMC) as its main foreign technology partner, Japan's Elpida Memory, secured an investment from TMC as well as funds from the Development Bank of Japan, boosting its cash position.
TMC will invest ¥20 billion (US$213.4 million) in Elpida, while the government backed bank will inject ¥30 billion in the company, according to Elpida. The DRAM company will use the cash to install new production line technology able to increase the number of chips rolling off production lines while lowering costs by 20 percent.
"Our business restructuring plan will not hinder the elimination of the excess supply in the industry," Elpida said in the statement.
Excess supply has been the fear many analysts and industry watchers raise as DRAM makers obtain new sources of cash from business partners and banks. Many DRAM makers have shuttered factories amid the global recession, but could reopen them if chip prices increase, and thereby flood the market with cheap DRAM again. The scenario would be good for users because it would keep DRAM cheap, but it would be devastating for companies trying to return to financial health after a two year chip glut.
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