Company Decides to Give Up on DRAM Business

The past few quarters have seen much talk about how things have being going from bad to worse on the DRAM industry, and it looks like they might have gotten serious enough that ChipMOS decided to phase out its packaging and testing business altogether.

The semiconductor industry may not be doing too badly overall, but one of its sub-segments is having a particularly strained life right now.

Basically, with inventories overstocked and demand low, average selling prices have been dropping constantly.

In fact, not only did DRAM makers fail to prevent this process, but they are even considering a reduction in production capacity.

It so happens that there are those that see the better choice in giving up on their DRAM stake altogether, like ChipMOS.

The Taiwanese company is known for packaging and testing DRAM, as well as delivering backend services for LCD driver ICs and flash products.

Now, Digitimes reports that this very IT player wants to gradually stop its DRAM activities, starting off with the cessation of segment operation expansion.

Granted, ChipMOS will continue to provide services to its current DRAM clients, but it will do so while seeking buyers for its unused DRAM testers.

Moving forward, the outfit will turn its LCD driver IC assembly and testing activities into the core of its business model.

This division should end up contributing with 40% of the total company revenues (current contribution is 29%), while the flash memory assembly and testing side will stick to the current 28%.

The report does not specifically say that this move was caused by the aforementioned international DRAM problems, but considering that ChipMOS recently had to take a five-year NT$8.4 billion syndicated loan from a banking consortium, the assumption is not that big a stretch.

What remains is to see if any other DRAM makers end up in a situation where they have to take more drastic measures than just reducing production capacity.

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