Infineon moves to stop DRAM production at Promos

In a move that could bring production of memory chips to a halt at one of Taiwan's largest memory makers and bring about a shortage of PC memory chips, German chip maker Infineon Technologies AG announced Monday it was immediately terminating a technology licensing deal with Promos Technologies Inc.

The termination of the technology licensing agreement could have devastating consequences for Promos, which relies on Infineon's technology to produce DRAM (dynamic RAM) chips, but is not expected to have an immediate affect on the pricing or availability of memory chips, according to one analyst that tracks the memory market.

"That (decision to end the licensing agreement) means Promos cannot make any products," said S.K. Kim, a DRAM analyst at IDC.

However, Kim expressed doubt over whether Infineon would actually be able to stop Promos from producing memory chips since the current licensing agreement is valid until 2005. "I don't think Infineon can stop Promos from making DRAM right now," Kim said.

"There will be a big lawsuit," he predicted.

If Infineon is able to force Promos to stop production of DRAM using its technology that would dramatically alter the face of the DRAM market, Kim said. "This could turn the DRAM oversupply situation into a shortage," he said, noting that Promos accounts for between 5 percent and 6 percent of worldwide memory production.

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