Japan's Elpida confirmed as partner of Taiwan Memory Co.

"Cooperation between TMC and Elpida will be deep and wide, " Yiin said during a break at a Legislative Yuan hearing.

Yiin added, however, that Elpida's involvement does not preclude the participation of another global DRAM giant, United States-based Micron Co.

He characterized the possibility of Micron joining the venture as highly promising, but said the timing would depend on how soon Micron completes negotiations with its existing partners, including Nanya Technology Corporation.

Taiwan Memory Co. is being set up by the government to revitalize the local dynamic random access memory (DRAM) industry and consolidate selected technology providers and domestic memory chip makers.

Taiwan's five publicly listed DRAM companies posted a combined net loss of NT$94.76 billion (US$2.8 billion) in the first nine months of 2008, and the government believed consolidation offered the best chance to the big five to survive with the economic slump and depressed DRAM demand extending into 2009.

John Hsuan, honorary vice chairman of United Microelectronics Corp. who is overseeing TMC's launch, said progress made in negotiations over the past month on the content and terms of cooperation has been smooth.

Hsuan stressed TMC's determination to have successful negotiations with Elpida and Micron, both of which have been key technology providers for Taiwan's DRAM manufacturers and are now expressing a keen interest in participating in the new venture.

Hsuan said Wednesday that TMC's operating plan is expected to be crafted by mid-April and that the company will be established within the first half of 2009.

The government, in principle, will not invest more than NT$30 billion (US$887.57 million) in the new venture, and the hope is that the private sector will inject an equally large sum, Hsuan said.

TMC will sign formal letters of intent on strategic partnerships with Elpida and Micron after the company is formally established and start-up funds received, Hsuan added.

When Yiin projected the new company's role March 5, he suggested it would develop its own core technologies to boost the local DRAM sector's competitiveness and said it would also set up a research and development center, develop a capacity consolidation platform and centralize sales functions.

He also indicated that TMC would first form a strategic alliance with a foreign partner before further negotiating the consolidation of Taiwan's existing DRAM manufacturers.

Hsuan on Wednesday emphasized the new venture's initial focus on upgrading technologies in conjunction with its foreign partners. He said the company will initially hire 400 employees in the area of manufacturing process development and another 400 in product design.

"There could be two manufacturing teams -- one from Elpida and one from Micron -- operating simultaneously in the company in order to avoid misgivings about possible infringement of their respective intellectual property rights," Hsuan suggested.

Wednesday's confirmation of the TMC-Elpida tie-up was seen as a positive step forward in consolidating the local DRAM chip industry, which has long taken a back seat technologically to South Korea's DRAM sector.

According to Taiwan-based DRAMeXchange Technology Inc., Asia's biggest online market for memory chips, local makers held a 23.2 percent share of the global market in terms of revenue in the fourth quarter of 2008.

South Korea led the industry worldwide as Samsung Electronics Co. controlled 24.5 percent and Hynix Semiconductor Inc. 20.4 percent of the global market.

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