A Taiwan official has dismissed a report that claimed the Taiwan government had decided to invest in Japan-based Elpida Memory in an effort to save the local DRAM industry.
Chen Chao-Yih, head of the Industrial Development Bureau (IDB) under the Ministry of Economic Affairs (MOEA), said the report about a government plan to acquire a stake in Elpida had been a misunderstanding. Investing in an overseas company could be one of the government's options for resucing the struggling local DRAM industry, but the government has not decided whether it will invest in Elpida.
Speculations have circulated that Taiwan is mulling buying a stake in Elpida, following a commitment made by the MOEA that the government intends to play an active role in forging some industry consolidation.
Taiwan has so far invested NT$850 billion (US$25.14 billion) in the DRAM industry and it is now seeking possible ways for the sector's transformation into a sustainable business, said Chen, reiterating the government's intention to save the industry.
In addition, Chen suggested that ProMOS Technologies should try its best to negotiate with banks for an extension of loan repayments. Commenting on the government's reluctance to commit itself to bailing out ProMOS, Chen said such a commitment would undermine the company's negotiation with the banks.
The creditors, believing that the government would do anything to prevent ProMOS from collapsing, would refuse to make any concessions in the negotiation process, he explained. Without the government promise, banks would have to make concessions so as to avoid ProMOS from declaring insolvency, Chen added.
As ProMOS reportedly still needs more guarantors in addition to Kingston Technology for a new syndicated loan deal with nine local banks, local media have speculated that the ProMOS may become the second DRAM maker to collaspe following Qimonda. If ProMOS fails to secure the loan for redeeming its ECB by the deadline (February 14, 2009), the company may have to file for bankruptcy protection, according to the speculations.
ProMOS has responded via a company filing with the Taiwan Stock Exchange (TSE) by saying that the company has no intention of declaring insolvency.
Article translated by Jessie Shen
