The Ministry of Economic Affairs’ recent rejection of two industry consolidation proposals by local computer memory chipmakers raised the question of what role the government should play in helping the country’s struggling DRAM companies.
Given their mounting debt and the uncertain state of the sector, it has become clear that credit banks are unlikely to lend money to local DRAM companies. On the other hand, the government is also hesitant to inject funds into local DRAM companies that cannot gain access to foreign partners’ technological know-how and develop homegrown technology in Taiwan.
ProMOS faces problems repaying US$330 million in overseas convertible bonds that will mature on Feb. 14, only two weeks after the Lunar New Year holiday.
To rescue ProMOS, the Chinese-language Economic Daily News said in a front-page story published on Thursday that credit banks might pump cash into the money-losing company in the form of loans, later converting the loans into shares in the firm.
While this idea gained inspiration from the comeback of Hynix Semiconductor Inc in South Korea a few years ago, the possibility of its success in Taiwan is questionable because ProMOS in no way looks like Hynix, either in terms of production scale or technological strength.
Moreover, this loan-equity conversion will still be subject to the approval of bank shareholders and financial regulators, and that is never an easy job.
On Friday, the director-general of the Industrial Development Bureau — a government agency that is in charge of reviewing DRAM companies’ industry consolidation proposals in exchange for a government bailout — told reporters that the government did not want any local DRAM companies to fail.
The official said that to maximize the effectiveness of government aid, it would like to see local DRAM companies consolidate into one to two groups with independent technology.
Unfortunately, the proposal’s rejection suggested local DRAM companies were experiencing difficulty convincing foreign partners to help develop homegrown technology in Taiwan. The chairman of Powerchip Semiconductor Corp said bluntly that an immediate cash injection was what the companies needed most, with industry consolidation and technological independence being a long-term goal.
Clearly, local DRAM companies desperately need cash. But that money will not come from private investors as long as the companies’ losses continue to grow. Therefore, the government seems to have little option but to play the role of savior.
The problem is whether the government’s goal is to protect the industry or save individual companies. There are reasons to question whether it is a waste of taxpayers’ money if the individual companies receiving government funds are doomed to fail with or without a bailout.
If the collapse of individual companies benefits the industry as a whole, then let it be so. If the government’s bailout effort only perpetuates the sector’s long-term weakness, this effort should be stopped now.
One way or another, the government should prepare for a possible collapse and try to reduce any negative impact while beefing up investors’ confidence.
Concerns that the US might abandon Taiwan are often overstated. While US President Donald Trump’s handling of Ukraine raised unease in Taiwan, it is crucial to recognize that Taiwan is not Ukraine. Under Trump, the US views Ukraine largely as a European problem, whereas the Indo-Pacific region remains its primary geopolitical focus. Taipei holds immense strategic value for Washington and is unlikely to be treated as a bargaining chip in US-China relations. Trump’s vision of “making America great again” would be directly undermined by any move to abandon Taiwan. Despite the rhetoric of “America First,” the Trump administration understands the necessity of
US President Donald Trump’s challenge to domestic American economic-political priorities, and abroad to the global balance of power, are not a threat to the security of Taiwan. Trump’s success can go far to contain the real threat — the Chinese Communist Party’s (CCP) surge to hegemony — while offering expanded defensive opportunities for Taiwan. In a stunning affirmation of the CCP policy of “forceful reunification,” an obscene euphemism for the invasion of Taiwan and the destruction of its democracy, on March 13, 2024, the People’s Liberation Army’s (PLA) used Chinese social media platforms to show the first-time linkage of three new
If you had a vision of the future where China did not dominate the global car industry, you can kiss those dreams goodbye. That is because US President Donald Trump’s promised 25 percent tariff on auto imports takes an ax to the only bits of the emerging electric vehicle (EV) supply chain that are not already dominated by Beijing. The biggest losers when the levies take effect this week would be Japan and South Korea. They account for one-third of the cars imported into the US, and as much as two-thirds of those imported from outside North America. (Mexico and Canada, while
I have heard people equate the government’s stance on resisting forced unification with China or the conditional reinstatement of the military court system with the rise of the Nazis before World War II. The comparison is absurd. There is no meaningful parallel between the government and Nazi Germany, nor does such a mindset exist within the general public in Taiwan. It is important to remember that the German public bore some responsibility for the horrors of the Holocaust. Post-World War II Germany’s transitional justice efforts were rooted in a national reckoning and introspection. Many Jews were sent to concentration camps not
RSS