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Taiwan pledges money to bail out DRAM makers

Dan Nystedt | July 22, 2009
Taiwanese companies can apply for government investment money but there are several stipulations

ProMOS Technologies finalized a deal in May to trim repayments on a US$330 million bond, and has cut back to a bare minimum work force able to keep some production lines rolling on hopes DRAM prices will rise later this year.

Winbond Electronics, the smallest of Taiwan's big five DRAM makers, signed an NT$3.7 billion syndicated loan agreement last week with a group of Taiwanese banks to boost its working capital and repay other debt.

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. A chip glut caused DRAM prices to fall in 2007 and most Taiwanese DRAM makers have reported continuous losses since then. DRAM prices have yet to rebound to a profitable level.

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.

Global DRAM revenue slumped to an eight year low in the first quarter of this year, according to Gartner. The market researcher said DRAM market revenue fell 41 percent year-on-year to US$3.57 billion in the first quarter, the lowest the industry has seen since the fourth quarter of 2001.

 

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