Mosel Vitelic, Infineon Discuss Taiwan Chip Mergers
Hsinchu, Taiwan, Nov. 7 (Bloomberg) -- Mosel Vitelic Inc., an unprofitable Taiwanese maker of memory chips, said it has held talks with German partner Infineon Technologies AG about merging with other money-losing local rivals to stay in business.
``Something has to be done to improve overall efficiency,'' Mosel Vice President Thomas Chang said in an interview. ``We've had talks about whether we should merge.''
Suppliers of computer memory chips turned to losses this year as they recoup about half of their production costs, prompting chipmakers such as Toshiba Corp. and NEC Corp. of Japan to idle plants and cut thousands of jobs amid the chip industry's worst slump. Mergers may help stem losses, which will probably continue through the first half next year, some investors said.
``From a shareholder's point of view, it should be like this,'' said Pedro Tai, who counts shares in some of the Taiwanese companies among the $2.5 billion he helps manage at HSBC Asset Management Taiwan. ``There have been rumors that Winbond Electronics Corp., Nanya Technology Corp. and ProMOS Technologies Inc. will merge.''
Shares of Winbond soared as much as their 7 percent limit to NT$13.25 on the Taiwan stock exchange. Shares of Nanya rose as much as 6 percent while ProMOS shares gained 4.2 percent.
Taiwan's five memory-chip makers, which account for about a fifth of global production, reported losses totaling $576 million in the three months to September. The Taiwan chipmakers, which depend on foreign partners for development costs, will need to merge to improve competitiveness, some investors said.
Infineon, which is also negotiating with Toshiba about a potential merger, will probably take months to complete talks with the Japanese company before it can evaluate possibilities in Taiwan, Chang said.
Partnerships
Infineon, the fourth-largest supplier of memory chips, has about a tenth of the world market, including contributions from ProMOS, its venture with Mosel. Infineon, which posted a third- quarter loss of 371 million euros ($332 million) in the third quarter, plans to shed 5,000 jobs.
To compete with larger rivals such as Samsung Electronics Co. of Korea, Micron Technology Inc. of the U.S. and Hynix Semiconductor Inc. of Korea, Infineon, a unit of Siemens AG, needs a market share of about 20 percent, according to analysts.
Infineon is evaluating the possibility of mergers with Toshiba and companies in Taiwan that share the same type of so- called ``trench'' technology that's used to make memory chips. That approach etches deeper troughs that connect more layers of silicon on a chip, thereby increasing the number of memory cells.
A rival ``stacked'' technology uses a different approach by adding sections of silicon to a chip and increasing the number of memory cells.
Toshiba, International Business Machines Corp. and Infineon, which cooperated in the development of trench technology, have separate manufacturing partners in Taiwan. IBM's partner is Nanya, while Toshiba has aligned with Winbond.
The potential mergers come as some partners throw in the towel on future development efforts.
``Toshiba said it will end its development efforts and get out of the business,'' ProMOS Vice President Albert Lin said in an interview. ``IBM and Infineon are still together.''
Winbond, which has cut production of memory chips to about a third of its output, declined to comment on the future of its partnership with Toshiba.
The possibility of mergers among the Taiwanese companies is ``an ongoing issue,'' Lin said.
Tokyo-based Toshiba may sell or close its dynamic random access memory, or DRAM, business as a way to reorganize its chip division, which the company expects to lose as much as $1.24 billion this fiscal year, company spokesman Kenichi Sugiyama said, confirmi |
