Powerchip to end unpaid leave as DRAM glut eases

Powerchip plans to end temporary layoffs as it sees the DRAM glut easing.

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Taiwanese DRAM maker Powerchip Semiconductor, once the largest DRAM maker on the island, plans to call back workers full time and end unpaid leave as the global memory chip glut eases.

The company had asked workers late last year to take unpaid time off as one measure to combat the global recession and worldwide memory chip glut. Now the company plans to end unpaid leave by Aug. 21 in order to be prepared for a recovery in the memory chip market, said Eric Tang, the company's spokesman, in a statement. He noted that customer demand has stabilized.

Powerchip is already expanding production of DDR3 (double data rate, third generation) DRAM chips, a new, more energy efficient DRAM that lengthens battery life in mobile computers compared to the older DDR2 chip.

The president of Taiwan's Inotera Memories, a rival DRAM maker, said there is currently a shortage of DDR3 in the market, during a news conference on Thursday.

The move by Powerchip to end unpaid leave and increase production shows the DRAM market is picking up, and that could lead to higher DRAM prices for users. But analysts have warned that increased production could send DRAM prices down again because the overproduction that led to the chip glut could return. A number of companies shuttered chip production lines as the recession took hold.

Taiwanese DRAM makers were particularly hard hit by the global recession and memory glut. The government moved earlier this year to establish a new chip maker, Taiwan Memory Company (TMC) to speed consolidation among the island's heavily-indebted DRAM makers. The plan now includes another group of companies led by Nanya Technology and Inotera Memories, both part of the conglomerate, the Formosa Plastics Group.

Powerchip has indicated it hopes to return itself to health without having to join either group. The company was boosted by an agreement last month to extend the repayment deadline on loans reported to be worth NT$63 billion (US$1.91 billion) through to Dec. 30 of this year. Powerchip also gained an NT$450 million loan from chip assembler Advanced Semiconductor Engineering (ASE) last month and a US$125 million loan from Kingston Technology, a DRAM module maker and chip distributor, earlier this month.

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