Nov. 11--TAIPEI -- A Taiwanese parliamentary committee called on the government Wednesday to disband Taiwan Memory Co., a state-run dynamic random access memory chip producer set up earlier this year to breathe new life into the island's failing chip sector.

The Legislative Yuan's Economics Committee, in a resolution, urged that the Economic Affairs Ministry dissolve TMC "for the sake of not wasting public funds." Using state funds, the ministry formed TMC in March to attract overseas technology and investment, including from Japan, to prop up the local US$30 billion DRAM industry. But the company has failed to do so in its eight months of operation.

Local and foreign chipmakers with operations in Taiwan, including Tokyo-based Elpida Memory Inc., have steered clear of cooperation with TMC, preferring to weather a supply glut and low chip prices via tie-ups with one another.

Elpida, for example, signed an agreement with Taiwan's ProMOS Technologies Inc. last week to transfer technology and outsource production of next-generation, high-performance 1-gigabit memory chips to the Hsinchu-based DRAM manufacturer.

On Wednesday, the Japanese chipmaker said it had signed a similar accord with Taiwan's Winbond Electronics Corp. for the manufacture of DRAM products.

In June, Elpida became the first recipient of public funds under an emergency financial aid program of the Japanese government to help nonfinancial firms survive the global economic crisis.

The injection of Japanese government funds further discouraged Elpida from cooperating with TMC, an arrangement that likely would have involved transfers of Japanese chipmaking technology to the Taiwanese state-run firm in exchange for financial aid.

By absorbing more advanced foreign chipmaking technology through TMC, Taipei had hoped to revitalize the island's own DRAM industry, a bid that seems to have failed.

The island's Cabinet will likely respond to the resolution soon, local media reported.

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