“Micron has decided not to participate in TMC as it is currently structured,” the U.S. chipmaker’s representative Fred Fishburn and Inotera Memories Inc. President Charles Kau jointly announced at a news conference in Taipei April 9. “Micron intends to closely cooperate with Nanya and Inotera in regard to research and development in Taiwan,” they said, adding, “therefore, we request the same support from the government as TMC is getting.” Statistics from Taiwan Stock Exchange showed that Micron’s units own 35 percent of Inotera, while Nanya holds a similar stake in the company as of March.
In response to Micron’s statement, John Hsuan, head of TMC, said he respected their decision, without elaborating further. On April 1, Hsuan named Japan’s Elpida Memory Inc. as TMC’s technology partner, but left the door open for future collaborations with Micron. He is now tasked with incorporating TMC by sourcing capital from the Cabinet-controlled National Development Fund and private investors.
The planned joint venture, proof of the island’s commitment to saving its struggling DRAM industry, aims at acquiring intellectual property and developing its own technologies. However, some analysts criticized the creation of a new player in an already overcrowded industry and argued that Micron’s announcement cast a shadow over the industry’s prospects as mergers between TMC and some major local manufacturers seem unlikely at this point.
Minister of Economic Affairs Yiin Chii-ming looked at the bright side of the latest development. “Micron’s technology transfer to Nanya is a positive move for the industry here.” Yiin said he expected benign competition between the TMC-Elpida camp and Micron-Nanya alliance. As for the Micron-Nanya camp’s call for government support, the minister stressed: “Any DRAM firms seeking government aid should submit their plans first and we will make an assessment accordingly.”
The rejection by Micron highlighted the industry’s head-on competition not only in chip pricing and cost reduction but also in technologies. “The biggest concern is technology,” pointed out Fishburn. He also noted that joining TMC could mean losing Micron technologies to Elpida.
Wu Chia-chau, chairman of Nanya, said it requires long-term commitments rather than just short-term approach of acquiring intellectual property for DRAM technologies to take root in Taiwan. “Formosa Plastics Group is dedicated to rooting technologies and developing their own brands and we hope the government will value such efforts,” he pointed out. Nanya and Inotera are members of the Formosa Plastics Group, one of the island’s leading industrial conglomerates. The group also includes prominent petrochemical and plastics producers such as Formosa Plastics Corp., Nan Ya Plastics Corp. and Formosa Petrochemical Corp.
Nanya Vice President Pai Pei-lin said his company and Micron have existing ties for jointly developing technologies over 10 years since 2008. According to Inotera’s president, Formosa Plastics Group has spent NT$40 billion over the past five years on R&D, mainly for manufacturing process technologies. “Some 90-95 percent of the outlay was for R&D in manufacturing process technologies, while the remaining was for R&D in products,” Kau said.
Cooperation in process technology R&D usually goes through three phases: licensing, joint development and originality. After a decade, the group has reached today the early stage of originality. Wu said Nanya now has an R&D staff of 800 and expects to be capable of independently developing technologies in 2012.
Formosa Plastics Group called for government support for the Micron-Nanya alliance in order to speed up technology development and raise the scale of the industry on the island. Liquidity is not the major issue behind the call for government support. “We hope the government will invest in us. This could also send the message of the government’s supportive stance,” Wu noted.
He also said the boards of directors of Nanya and Inotera will discuss about raising capitals. “The group will demonstrate its continuing support for the DRAM industry,” he declared, adding that he welcomes other peers to join the Micron-Nanya camp.
Write to Adela Lin at adela2009@mail.gio.gov.tw