Promos to sell fab to Global Foundries

TAIPEI, TAIWAN: Taiwanese memory chip maker ProMOS Tech will sell its 12-inch wafer fab to contract chipmaker Global Foundries, industry paper Digitimes said on Friday, at an estimated price of T$20-30 billion ($676 million - $1 billion).

Without citing sources, the newspaper said the price Global Foundries will pay is much lower than the cost of building a new 12-inch fab. Global Foundries, owned by an Abu Dhabi state fund, will also take on some of Promos' debt, the report said.

Promos said in a statement the report was "speculation". Global Foundries spokeswoman Gina Wong said it does not comment on market rumours.

Promos, which will be delisted on March 26, has a $1.9 billion debt burden and has been unable to produce its earnings. Its shares have been suspended from trade since Sept. 6 last year.

It has been given low interest loans by its creditor banks at government prodding while it looks for a solution to its woes.

Its problems have become a symbol of the state of Taiwan's dynamic random access memory (DRAM) industry, which is struggling to keep afloat amid falling prices and stiff competition and higher costs of investing in new technology.

Sources had told Reuters earlier this month that two potential buyers of the wafer fab had been conducting due diligence

But analysts said the reported price seems too high, noting failed talks over a fab between Global Foundries and Taiwan's Powerchip Technology earlier this year.

"I think the price tag is quite impossible; it's too much," said Joyce Yang, chief executive of Eureka International Corp, a Taipei-based semiconductor industry research company.

"Previously a deal between Global Foundries and Powerchip fell apart because they couldn't agree on a price, where Powerchip asked for T$25 billion for its fab. And Promos' fab is much older than Powerchip's."

DRAM memory chip makers globally are struggling as falling prices and huge investments to stay competitive saddle them with massive losses, forcing them to consider steps such as tie-ups to gain scale, move into higher-value chips or seek financial help.

Japan's Elpida Memory Inc this month flagged doubts about its ability to continue as a going concern.

Taiwan's makers have posted combined total losses of some T$215 billion ($7 billion) since 2007 and have only a combined 7 percent of the market for the chips, used in PCs, versus 45 per cent for industry leader Samsung Electronics.