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Taiwan's DRAM producers agree to output cut

In principle, at least, and won't help the market much in any case

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Taiwanese memory makers appear to have gone back to the table to negotiate an across-the-board reduction in DRAM production.

Earlier this month it emerged that preliminary talks between the world's largest memory makers had broken down.

However, Mosel Vitelic vice-president Thomas Chang said this week that his company is talking to fellow memory makers about production cuts. The output reductions would be made with a view to halting the downward spiral of DRAM prices, itself caused by supply vastly outweighing demand.

Few memory companies have been willing to cut production and risk losing out when the market picks up. With no sign of such a recovery taking place any time soon, the Dramurai are at last wondering whether it's worth taking the risk.

But only if they all agree. Last time this happened, all but Micron agreed to cuts, which allowed the US company to do very nicely thank you when the market recovered.

Chang admitted that a basis for understanding has been reached. "Our preliminary agreement is to trim some production starting September," he said. Who is party to that agreement, he would not say, suggesting at the very least that not all memory makers have given the nod.

And Chang's comments imply that an agreement has only been struck between Taiwanese memory makers. If so, it leaves out major world players like Infineon, Hynix, Samsung and Micron. By contrast, Taiwan's memory producers combined account for only 15 per cent of the global market.

Hynix has already made some efforts - albeit small ones - to cut production. Last month it shut down one of its plant in the US while the facility is upgraded. Toshiba said yesterday it too has planned to cut memory production. It will end DRAM production at its Fab 1 plant, in Yokkaichi, Japan, at the end of September. ®

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