Promos hits back at Infineon in DRAM dispute

Taiwanese memory-chip maker Promos Technologies has hit back after Infineon Technologies AG announced Monday it had terminated a technology licensing agreement between the two companies, calling statements made by the German chip maker "misleading" and "ill-intended."

Infineon announced Monday it was terminating the technology license agreement effective immediately. Since Promos relies on technology licensed from Infineon to produce DRAM (dynamic RAM) chips found in PCs, termination of the licensing agreement would force Promos to stop producing memory until it could find an alternate technology supplier.

If Promos, which accounts for as much as 6 percent of global DRAM production, was forced to shut down its production lines the impact on the global memory market could be significant, turning a situation of oversupply into one of a shortage of some memory chips and driving up prices.

Infineon's announcement that it had terminated the licensing agreement came as the Hsinchu District Court in Taiwan Monday issued an injunction to reinstate two Infineon employees that had been "illegally" removed from their positions at Promos earlier this month, the German chip maker said.

The two Infineon employees, Michael Buckermann and Angela Shih, had been removed from their posts, as a member of Promos' board of directors and supervisor at the company respectively, at a shareholder meeting on Jan. 10, Infineon said. The injunction reinstated them to their former posts effective immediately, it said.

In a statement issued Tuesday, Promos called Infineon's announcement of the termination of the licensing agreement and the court's injunction a "media blitz" that was "misleading" and "ill-intended."

Promos noted that the Hsinchu District Court injunction to reinstate Buckermann and Shih to their positions was provisional and said Infineon had been required to post a bond of NT$70 million (US$2 million) as a condition of the ruling.

The Taiwanese memory maker also took Infineon to task over the termination of the licensing agreement, saying the agreement was still in effect. Infineon had not sent Promos written notice that it was in breach of the licensing agreement, as Infineon had claimed in a statement Monday, it said. That notice, and a 60-day period that would allow Promos to correct any breach, is a precondition for termination of the technology license, it said.

Promos was established in 1996 as a joint venture between Infineon and Taiwanese DRAM maker Mosel Vitelic Inc. Bad blood has been building between the two partners since last year, when Infineon announced plans to sell off its shares in Promos and said Mosel had repeatedly violated the terms of the joint venture agreement.

Infineon went a step further in December, announcing it would terminate its production agreement with Promos on Dec. 31, 2002. Prior to that announcement, Infineon had agreed to purchase 48 percent of Promos' DRAM output.

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Sumner Lemon

PC World
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