Infineon and Toshiba have at long last decided how they can bring their two DRAM operations together - all they have to decide now is whether they want the merger to take place.

The decision is in the hands of both companies' boards, an Infineon spokeswoman said. Each company must approve the merger before a final plan can be hammered out. Infineon's board may be more willing to agree to the deal now that it will soon contain fewer Siemens representatives.

A Reuters report claims that the deal, if approved, could see the formation of a joint venture along the lines of Elpida, the company backed by Hitachi and NEC. Infineon would own 80 per cent of the joint venture.

Comments made to EBN by Infineon's chief executive, Ulrich Schumacher, suggest that negotiators have successfully steered around the Flash memory rock on which it was thought the merger talks might founder. Toshiba is believed to have wanted to include Flash operations in the merger deal, but Infineon was far less keen.

That's not to say that Flash won't be included in the merged memory business. Schumacher didn't rule out a Flash component to the final deal, so it seems likely that the two companies have agreed that they shouldn't allow their differences to scupper the wider alliance.

Indeed, the Reuters report claims that the plan sent to the two companies' boards for approval would have Infineon taking a 20 per cent stake in Toshiba's Flash business.

At a press conference, Schumacher said: "It can't cost us a single mark for the next 18 months. It's a hard demand but that's the way it is."

Clearly, Infineon doesn't want to pump any more money into the venture than it is already investing in its own memory operation. In turn, that suggests Toshiba is keener to sell than Infineon is to buy, which is probably why the German company has been able to negotiate what appears to be such an advantageous deal.

That situation is mirrored in the Hynix-Micron talks, which although at a less advanced stage than the discussions between Infineon and Toshiba, are again characterised by Hynix's need for a partner's cash and Micron's understandable unwillingness to spend any money on it. ®

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