Identifier
Created
Classification
Origin
09AITTAIPEI284
2009-03-16 09:16:00
CONFIDENTIAL
American Institute Taiwan, Taipei
Cable title:
TAIWAN HOPES TO CHOOSE FOREIGN DRAM PARTNER BY THE
how-toP 160916Z MAR 09 FM AIT TAIPEI TO SECSTATE WASHDC PRIORITY 1120 INFO CHINA POSTS COLLECTIVE AMEMBASSY WELLINGTON AMCONSUL CHIANG MAI AMCONSUL HO CHI MINH CITY AMCONSUL SURABAYA SECDEF WASHINGTON DC USPACOM HONOLULU HI JICPAC HONOLULU HI DEPT OF TREASURY WASHINGTON DC NATIONAL SECURITY COUNCIL WASHINGTON DC CIA WASHINGTON DC DEPT OF COMMERCE WASHINGTON DC
C O N F I D E N T I A L AIT TAIPEI 000284
STATE FOR EAP/TC
STATE PASS USTR FOR STRATFORD AND ALTBACH, TREASURY FOR
OASIA/WINSHIP AND PISA, NSC FOR LOI, COMMERCE FOR
4431/ITA/MAC/AP/OPB/TAIWAN,
E.O. 12958: DECL: 03/15/2019
TAGS: ECON ETRD PGOV PREL TW
SUBJECT: TAIWAN HOPES TO CHOOSE FOREIGN DRAM PARTNER BY THE
END OF MARCH
REF: TAIPEI 227 AND PREVIOUS
Classified By: Stephen M. Young, AIT Director, for reasons 1.4 (b) and
(d).
C O N F I D E N T I A L AIT TAIPEI 000284
STATE FOR EAP/TC
STATE PASS USTR FOR STRATFORD AND ALTBACH, TREASURY FOR
OASIA/WINSHIP AND PISA, NSC FOR LOI, COMMERCE FOR
4431/ITA/MAC/AP/OPB/TAIWAN,
E.O. 12958: DECL: 03/15/2019
TAGS: ECON ETRD PGOV PREL TW
SUBJECT: TAIWAN HOPES TO CHOOSE FOREIGN DRAM PARTNER BY THE
END OF MARCH
REF: TAIPEI 227 AND PREVIOUS
Classified By: Stephen M. Young, AIT Director, for reasons 1.4 (b) and
(d).
1. (C) SUMMARY. John Hsuan, the IT executive charged with
coordinating Taiwan's DRAM sector restructuring plan
(reftel),will visit Idaho's Micron Technology and
Tokyo-based Elpida within the next week. By the end of
March, Hsuan plans to choose either Micron or Elpida, but not
both, as foreign partner for the new Taiwan Memory Company
(TMC) that will use official support to establish a
restructured DRAM industry combining both R&D and production
in Taiwan. END SUMMARY.
2. (C) In a March 13 meeting with Economic Chief, former
United Microelectronics (UMC) Vice Chairman and Taiwan Memory
Company coordinator John Hsuan detailed his plans to organize
the restructuring of Taiwan's DRAM sector (reftel). Hsuan
said he will meet with Micron Technology executives in Boise,
Idaho on March 19 as part of a short trip to the U.S. that
will also include meetings in San Francisco. After leaving
the U.S. at the end of this week, Hsuan will travel to Tokyo
for meetings with Elpida executives before returning to
Taiwan. Contrary to earlier indications we received from
Ministry of Economic Affairs (MOEA) officials, Hsuan
indicated that the restructuring plan will include either
Micron or Elpida as a partner, but not both companies. Hsuan
hopes to choose between the two firms by the end of March,
and will then prepare a business plan for the launch of TMC
by mid-April.
3. (C) Hsuan emphasized that he will develop TMC's business
plan with an eye toward creating a company that can compete
with industry benchmark Samsung on both cost and technology.
In that context, he stressed the importance of access to
advanced technology as a key factor in choosing a partner.
In his analysis, Taiwan's DRAM sector suffers from chronic
overcapacity. At the same time, it relies on what he
described as an outmoded business model of marrying U.S. and
Japanese technology with Taiwan production capacity.
Instead, he emphasized, Taiwan must develop a
vertically-integrated DRAM industry in which research and
development, as well as actual production, all take place in
Taiwan. Hsuan reiterated earlier assurances that the
state-owned share of TMC will remain below 50%, and said he
has already been approached by private equity firms about
investing in the new company.
4. (C) In a separate March 13 conversation with Economic
Chief, Minister-without-portfolio Chu Yun-peng noted that a
Micron representative, joined by Formosa Plastics chief
William Wang (NOTE: Formosa Plastics owns Micron partner
Nanya Technology),met with Premier Liu Chao-shiuan and other
senior economic officials during the week of March 2 to
advance Micron's case. Chu, who attended the meeting, said
he was impressed with what he described as a generous Micron
offer to share technology if it were chosen as TMC's foreign
partner. Shih Yen-shiang, the new head of state-owned
Chinese Petroleum Corporation (CPC),until recently served as
the MOEA Vice Minister responsible for DRAM restructuring.
On March 12, Shih told us that although MOEA does not have a
firm timetable for setting up TMC and choosing a foreign
partner, Hsuan has been given a considerable degree of
autonomy in setting his own timeline for establishing the new
company and choosing either Elpida or Micron as a partner.
5. (C) COMMENT. Hsuan appears intent on adhering to an
aggressive timeline for identifying TMC's foreign partner.
Micron is advancing its case on the ground on Taiwan, and
will be able to do so directly with Hsuan in Boise this week.
We will continue to track the case closely, and in the
meantime urge a prompt USDOC decision on Micron's pending
advocacy request. END COMMENT.
YOUNG
STATE FOR EAP/TC
STATE PASS USTR FOR STRATFORD AND ALTBACH, TREASURY FOR
OASIA/WINSHIP AND PISA, NSC FOR LOI, COMMERCE FOR
4431/ITA/MAC/AP/OPB/TAIWAN,
E.O. 12958: DECL: 03/15/2019
TAGS: ECON ETRD PGOV PREL TW
SUBJECT: TAIWAN HOPES TO CHOOSE FOREIGN DRAM PARTNER BY THE
END OF MARCH
REF: TAIPEI 227 AND PREVIOUS
Classified By: Stephen M. Young, AIT Director, for reasons 1.4 (b) and
(d).
1. (C) SUMMARY. John Hsuan, the IT executive charged with
coordinating Taiwan's DRAM sector restructuring plan
(reftel),will visit Idaho's Micron Technology and
Tokyo-based Elpida within the next week. By the end of
March, Hsuan plans to choose either Micron or Elpida, but not
both, as foreign partner for the new Taiwan Memory Company
(TMC) that will use official support to establish a
restructured DRAM industry combining both R&D and production
in Taiwan. END SUMMARY.
2. (C) In a March 13 meeting with Economic Chief, former
United Microelectronics (UMC) Vice Chairman and Taiwan Memory
Company coordinator John Hsuan detailed his plans to organize
the restructuring of Taiwan's DRAM sector (reftel). Hsuan
said he will meet with Micron Technology executives in Boise,
Idaho on March 19 as part of a short trip to the U.S. that
will also include meetings in San Francisco. After leaving
the U.S. at the end of this week, Hsuan will travel to Tokyo
for meetings with Elpida executives before returning to
Taiwan. Contrary to earlier indications we received from
Ministry of Economic Affairs (MOEA) officials, Hsuan
indicated that the restructuring plan will include either
Micron or Elpida as a partner, but not both companies. Hsuan
hopes to choose between the two firms by the end of March,
and will then prepare a business plan for the launch of TMC
by mid-April.
3. (C) Hsuan emphasized that he will develop TMC's business
plan with an eye toward creating a company that can compete
with industry benchmark Samsung on both cost and technology.
In that context, he stressed the importance of access to
advanced technology as a key factor in choosing a partner.
In his analysis, Taiwan's DRAM sector suffers from chronic
overcapacity. At the same time, it relies on what he
described as an outmoded business model of marrying U.S. and
Japanese technology with Taiwan production capacity.
Instead, he emphasized, Taiwan must develop a
vertically-integrated DRAM industry in which research and
development, as well as actual production, all take place in
Taiwan. Hsuan reiterated earlier assurances that the
state-owned share of TMC will remain below 50%, and said he
has already been approached by private equity firms about
investing in the new company.
4. (C) In a separate March 13 conversation with Economic
Chief, Minister-without-portfolio Chu Yun-peng noted that a
Micron representative, joined by Formosa Plastics chief
William Wang (NOTE: Formosa Plastics owns Micron partner
Nanya Technology),met with Premier Liu Chao-shiuan and other
senior economic officials during the week of March 2 to
advance Micron's case. Chu, who attended the meeting, said
he was impressed with what he described as a generous Micron
offer to share technology if it were chosen as TMC's foreign
partner. Shih Yen-shiang, the new head of state-owned
Chinese Petroleum Corporation (CPC),until recently served as
the MOEA Vice Minister responsible for DRAM restructuring.
On March 12, Shih told us that although MOEA does not have a
firm timetable for setting up TMC and choosing a foreign
partner, Hsuan has been given a considerable degree of
autonomy in setting his own timeline for establishing the new
company and choosing either Elpida or Micron as a partner.
5. (C) COMMENT. Hsuan appears intent on adhering to an
aggressive timeline for identifying TMC's foreign partner.
Micron is advancing its case on the ground on Taiwan, and
will be able to do so directly with Hsuan in Boise this week.
We will continue to track the case closely, and in the
meantime urge a prompt USDOC decision on Micron's pending
advocacy request. END COMMENT.
YOUNG