Taiwan lawmakers reject funds for memory chip makers

A committee of Taiwanese lawmakers rejected requests for funding by Taiwanese memory chip companies on Wednesday and asked the executive branch to stop promoting the DRAM revitalization plan. That committee reviews applications before they are passed to the legislative body for a vote. The economics committee of the Taiwan legislature rejected requests by Powerchip Semiconductor and the government-led Taiwan Memory Company (TMC), a legislative aide confirmed.

Lawmakers in the group believe the worst of the global economic crisis has passed and that DRAM makers should be able to fend for themselves considering the rebound in DRAM prices this year, the aide said. The legislature usually follows committee recommendations when voting. The executive branch can work with lawmakers on a more palatable plan, but convincing the economics committee is vital. The rejection throws a wrench into the government's plan to restructure Taiwan's DRAM industry. The plan was the result of a crisis among DRAM makers caused by excessive debt and an inability to raise new funds amid the global recession.

In March, Taiwan's Ministry of Economic Affairs unveiled a plan to build TMC as a means for industry consolidation and DRAM technology development. Taiwanese DRAM makers built too many new factories during good times, leading to a glut of DRAM chips and a collapse in global DRAM prices. The Taiwan government first stepped in to ask banks on the island to give companies more time to repay loans and extensions were granted until Dec. 31. A government report argued the amount of money DRAM makers on the island owed Taiwanese banks could cause problems if not repaid. Most Taiwanese DRAM makers have not posted a net profit since the middle of 2007 due to the chip downturn.