Powerchip seeks control of flash memory maker

TAIPEI – Powerchip Semiconductor Corp., the largest DRAM (dynamic RAM) maker in Taiwan, is seeking management control of flash memory maker Macronix International Co.

The DRAM maker, which is Macronix’s largest shareholder with over a 5 per cent stake in the company, ran half-page advertisements in Taiwan’s two largest daily financial newspapers today, the Economic Daily News and Commercial Times, telling shareholders to vote for its nominees in board elections next month.

Powerchip is seeking eight of the 15 board seats, and one of four supervisory seats at Macronix. If its nominees win, Powerchip would be able to choose the CEO, president and other members of the management team at Macronix.

Macronix has asked shareholders to reject Powerchip’s nominees. In two open letters last week, the chairman of the company accused Powerchip of attempting to take over his company, and said it has rejected meetings to discuss possible new board members. He also said control by Powerchip would have a negative impact on business. Powerchip has denied the allegations.

The reason Powerchip may be vying for management control at Macronix may be to further diversify into flash memory, along with fulfilling orders for a major game console maker, Nintendo Co. Ltd. Powerchip and other DRAM makers have been moving into new markets ever since a major slump in DRAM prices nearly put some makers out of business earlier this decade.

Prices have been unkind to manufacturers this year as well. The most popular DRAM used in PCs, 512M DDR2 (double data rate, second generation) chips that run at 667MHz, have declined 72 percent since the beginning of the year to US$1.75 per chip, according to DRAMeXchange Technology Inc., a clearinghouse for the chips. The price is below manufacturing costs, causing most DRAM makers to lose money on the chips they sell at such a low price.

Macronix supplies Mask ROM (read-only memory) chips for Nintendo’s popular Wii game console, a hit product that has boosted component suppliers along with Nintendo. Flash memory is Macronix’s other main product, and makes up over 40 percent of its output.

IDG News Service

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