TAIPEI, TAIWAN - Taiwan Memory Company (TMC), a new government-backed firm set up to consolidate the island's memory-chip industry, said Wednesday it will form a partnership with Japan's Elpida Memory Inc.

The decision comes as US semiconductor company Micron Technology Inc. also expressed a "strong" intention in a tie-up, TMC added.

"The company is still discussing with the two companies the pertinent details," a TMC statement said.

Elpida, the world's third largest maker of DRAM chips used in mobile phones and home electronics, already has a joint venture with Powerchip Semiconductor Corp, while Micron is in partnership with Nanya Technology Corp.

The TMC tie-up will aim to secure badly needed core technologies and consolidate the local industry to upgrade the island's competitiveness in the DRAM (dynamic random access memory) chip market, the economics ministry said.

Taiwan said last month it would set up TMC to restructure the island's memory-chip sector and announced that industry veteran John Hsuan, honorary vice chairman of Taiwan's United Microelectronics Corp, will head it.

Government investment would not exceed 50 percent, according to the ministry.

Details of TMC have not been finalised, but the ministry said it would not rule out a merger of Taiwan's six DRAM manufacturers, which have posted huge losses and turned to the government for assistance.

In the nine months to September, the island's four leading DRAM makers jointly booked a record net loss of more than 90 billion Taiwan dollars (2.6 billion US), with a full-year loss surging to 120 billion Taiwan dollars. --AFP