Elpida mulls plan to buy Powerchip

SAN JOSE, Calif. -- Japan's Elpida Memory Inc. is mulling over a plan to acquire Taiwan's Powerchip Semiconductor Corp., according to reports from Reuters and others.

Both DRAM suppliers are losing money amid the memory downturn, but Powerchip is in a bad position. Powerchip (Hsinchu) reported that total revenue reached NT$14.97 billion ($448.3 million) in Q3, with an after-tax net loss of NT$15.02 billion ($449.8 million).

Reports have surfaced that Powerchip may soon run out of money. There is also talk that the Taiwan government could bail out the island's DRAM firms.

But over time, some speculate that Elpida will rescue Powerchip. The two companies are close partners. In 2006, Powerchip and Elpida signed an agreement to establish a DRAM joint venture in Taiwan, dubbed Rexchip.

Elpida is also struggling and is moving into new markets to offset the losses in DRAMs. It has moved into the foundry and LCD driver businesses.

Recently, Elpida delayed the start of a DRAM manufacturing joint venture in China by one year or more due to the downturn.

Meanwhile, Taiwan DRAM vendor ProMOS Technologies Inc. could also be the subject of a takeover in time. Some speculate that Korea's Hynix Semiconductor Inc. could acquire ProMOS.

The two companies are no strangers. Hynix recently bought an 8-to-10 percent stake in ProMOS through private placement to strengthen their long-term cooperation. Hynix also licensed its 50-nm, stack-capacitor process technology to ProMOS. DRAM maker ProMOS will offer capacity from its 300-mm fab to Hynix.

Backed by deep pockets, Taiwan DRAM supplier Nanya Technology Corp. has a better chance for survival.