While financial institutions and car makers are getting bailed out in the Western world, the Taiwanese government is planning to bail out its troubled memory chip sector:
Recent reports depict an industry desperately seeking financial help. The Taiwanese government has responded by offering loans, according to a variety of reports.
One report on Thursday said that Taiwan's economic affairs ministry has approved a rescue package. No specifics have been revealed, however.
At stake is Taiwan's dynamic random access memory (DRAM) industry. DRAM is the main memory used in personal computers.
Avi Cohen, managing partner at Avian Securities, which covers memory chip market movements, says "it's something (the government) will have to do if they want to keep all those people employed" at DRAM manufacturers in Taiwan.
And why is this happening? "The Taiwan DRAM industry is falling further and further behind in terms of cost and in terms of production volumes. They have the worst cost basis," Cohen said. "The guys that can produce DRAM on the newest equipment are the most competitive. And therefore can eke out a little profit. Everybody else loses money."