TAIPEI, TAIWAN: The computer chip firm set up by Taiwan to overhaul its struggling DRAM sector will be asking for about T$10 billion ($306 million) from the government, an economics ministry spokesman said on Friday.

Woody Duh, director general of the industrial development bureau at Taiwan's economics ministry, also said Taiwan Memory Co (TMC) was seeking to merge with or acquire other local DRAM makers, and may take an about 10 per cent stake in Japan's Elpida.

"The money is going to come from a number of different sources, including research subsidies and other programmes meant to help the industry," said Duh.

TMC had previously announced that it would be working with Elpida to help consolidate Taiwan's struggling DRAM sector to help it compete against larger rivals such as South Korea's Hynix.

The new figure is lower than the previously announced plan of a T$30 billion injection, but Duh said TMC would now be looking to other sources to help fund its start-up costs.

"The government's stake in TMC will not be more than 50 per cent," said Duh. "TMC will continue to look towards its own sources for capital as well as asking for government help."

TMC was set up in April to help the island's struggling DRAM chip makers such as Powerchip and Nanya Tech as they struggle with plunging prices and falling demand.

The Chinese-language Commercial Times newspaper also reported on Friday that TMC was hoping to eventually take a 20 per cent stake in Elpida, but Duh declined to confirm the report.

"Our current discussions haven't gone that far," he said.

Elpida shares extended earlier gains on the news, up 1.92 per cent at 0059 GMT, outperforming the Nikkei's 0.79 per cent advance.

Shares in Taiwan's DRAM companies fell, with Powerchip down 2.12 per cent, Nanya Tech losing 2.5 per cent and ProMOS plunging by its daily limit.