End of Taiwan Memory?

Taiwan's Legislative Yuan (the national legislative assembly) has cut off further support for Taiwan Innovation Memory Corporation (formerly Taiwan Memory Corporation). However, the Ministry of Economic Affairs (MoEA) does not seem to be completely giving up on this project since the cut-off applies to funding for next year. As the prices look better than they did in the recent past, the MoEA may find it very hard to pursue its plan of gobbling up failing memory makers on the cheap, without or without new funds from the legislature.

Richard Chang's Exit: Quick Note

Rumors are flying fast around Richard Chang's departure from SMIC. Some claim that Chang's departure was required by TSMc as part of the deal to end TSMC's lawsuit against SMIC. Others speculate that bringing in David NK Wang means that SMIC will merge with another firm. Would that firm be HuaHong? I'll be back more with more in a few days after reading all the tea leaves.

Is ChiNext China's NASDAQ?

ChiNext just started its trading. After one day, things look quite frothy. So frothy that according to Business Week (link here) some foreign institutional investors interested in it are sitting on the sidelines for now. The real question is will ChiNext actually serve as a NASDAQ-style exchange for entrepreneurial high-tech companies. Given that the first 28 companies were hand-picked by the government to list on the new exchange, the signs are not that hopeful thus far. Indeed, one need only look across the river to Hong Kong's weak GEM exchange to realize that new exchanges alone cannot serve to create another NASDAQ when the other institutions supporting tech entrepreneurship are missing.

Acer passes Dell

Acer has finally passed Dell in terms of global computer sales (link here). The rise of Acer and other Taiwanese brands, such as HTC, proves the wisdom of Acer's decision to focus on brand while hiving off its manufacturing operations, including manufacturing services. The Taiwanese fretted for years about their inability to create brands in sad contrast to big Korean brands like Samsung, but since adopting the same strategy for brand that they did for other parts of the value chain (i.e. segmentation of the value chain and then narrow focus on one small slice of the value chain), they have achieved great success without needing the scale and scope of Korean chaebol.

More news on the Grace-Hua Hong merger

I was in China about a week ago and a well informed source close to parties in both firms suggested that the merger is definitely going ahead. The likely CEO of the merged company will be Grace's Schumacher not Hua Hong's TY Chiu. Indeed, the source speculated that TY Chiu would probably leave Hua Hong for a second time because it is too hard to run this state-owned company due to government interference. Supposedly the planned merger will be basically financial with the two companies still maintaining operational independence.

First Solar to China

First Solar, US-based and the world's largest solar panel maker, has been seen as competitive with Chinese imports because it uses thin film (technically speaking it is cadmium telluride) technology. Admittedly this blog has also subscribed to this optimistic point of view (see my Aug. 26 post). However, now First Solar has announced plans to build a 2 GW facility in Ordos, Inner Mongolia (link here). One could decry the offshoring of arguably technology-intensive manufacturing, but the price of silicon, which is the material with which Chinese firms make their solar panels, is falling dramatically. In fact, the price of silicon is falling so fast that some Chinese solar panel firms, such as Trina, claim that their unit costs per kwh will be cheaper than First Solar's by 2010. Thus, First Solar's offshoring is an understandable reaction to these shifting materials costs, but this case provides no reassurance to those who aspire to compete with China-based manufacturing through investments in technology.

GlobalFoundries and Chartered: Impact on SMIC

The purchase of Chartered by GlobalFoundries should impact the foundry industry for years to come, but is it good or bad for SMIC? Mark Lapedus at EE Times (link here) argues that SMIC is a winner in the wake of this merger because there is one less leading edge foundry firm in the marketplace. I am not convinced the implications are actually so positive for SMIC because the GlobalFoundries-Chartered combination is more formidable than Chartered alone. And let's face it, among the big four foundires, SMIC and Chartered were battling to see who would not end up in fourth place so enhancing Chartereed's competitiveness impacts SMIC more negatively than TSMC or even UMC. With AMD as a steady client, sharing the cost of IBM's licensing fees over a larger scale firm and the deep pockets of Abu Dhabi's Advanced Technology Investment Corporation (ATIC), the merged firm is much more of a threat than Chartered alone despite Singapore's lavish support for the firm over the years. Furthermore, the merger does not seem to consolidate the amount of mainstream CMOS capacity out there since GlobalFoundries did not have much of that prior to the merger.