UPDATE:Taiwan Government: DRAM Cos Can Apply For Government Invest

The Taiwan government said Tuesday the island's makers of dynamic random access memory chips can seek investment from the government in support of their plan to restructure the chip industry.

DRAM makers that will be eligible for such investment includes companies that can gain access to foreign firms' intellectual property rights, propose plans to jointly develop next-generation technologies with foreign partners, and consolidate through mergers and acquisitions, the Bureau of Industrial Development said in a statement.

The Taiwan government said in March it will set up a new chip company called Taiwan Memory which will be tasked with developing next-generation chip technologies to increase the island's competitiveness in the DRAM sector. In April, Taiwan Memory chose Japan's Elpida Memory Inc. (6665.TO) as its technology partner. At the time, Minister of Economic Affairs Chii-ming Yiin said the government may invest less than NT$10 billion in Taiwan Memory.

The government didn't give a value for the investment program, which comes after Yiin said earlier this month that Formosa Plastics Group submitted a proposal seeking NT$20 billion to NT$30 billion for its memory-chip units, Nanya Technology Corp. (2408.TW) and Inotera Memories Inc. (3747.TW).

Inotera is a joint-venture between Nanya and U.S. chip-maker Micron Technology Inc. (MU).

Separately, Powerchip Semiconductor Corp. (5346.OT) is considering applying for government investment, company spokesman Eric Tang said Tuesday.

"Powerchip meets the conditions the government has set," Tang said.

Powerchip is Taiwan's second-largest DRAM maker by revenue after Nanya Technology Corp.

Global DRAM makers have suffered from consecutive quarterly losses since last year after a supply glut drove chip prices well below their manufacturing costs. Prices have slowly rebounded this year after companies cut production and their capital expenditure budgets. Many have sought help from their governments in order to ride out the DRAM sector's worst downturn since 2001.

-By Jessie Ho, Dow Jones Newswires; 88622 502-2557; [e-mail]