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Taiwan's Powerchip submits plan for state aid

TAIPEI (Reuters) - Powerchip, Taiwan's biggest DRAM memory chip maker, said on Friday it has submitted a proposal to the Taiwan government detailing its plans to work with Japan's Elpida on their Rexchip joint venture.

A Powerchip spokesman did not give any further details, but a statement released on the Taiwan Stock Exchange website by the company declined comment on local media reports that said it was asking for at least T$20 billion ($606 million) in state aid.

The Chinese-language Commercial Times reported on Friday that Powerchip was set to ask for state aid from the island's National Development Fund in return for a stake in Rexchip.

The paper, citing unnamed sources, said other plans being considered included a company bond issue for the government to buy into, and an outright cash injection from government coffers.

ProMOS, which competes with Powerchip, had previously asked for government assistance.

Market talk about consolidation has swirled through the global DRAM industry in recent months, as the sector streamlines to help adapt to a large oversupply of dynamic random access memory (DRAM) chips used mainly in personal computers.

Memory chip makers worldwide are struggling to raise cash and cut production to survive amid falling prices and weak demand in what companies expect is the worst downturn the sector has experienced.

At around 0507 GMT, shares of Powerchip fell 1.6 percent, underperforming the broader market's 0.31 percent rise.