Speculation that Foxconn Electronics is attempting to extend its presence in DRAM module business is being fueled by reports that the company has recently accumulated shares at Transcend Information.

Starting from late May, about 20 million Transcend shares, or 7-8% of the company's capital, have been released from specific overseas equity firms, according to industry sources.

Foxconn company spokesperson Edmund Ding, however, claimed no knowledge over the speculation.

Transcend company chairman Perter Shu said both parties have not yet had contact regarding a partnership on DRAM module business. He refuted rumors saying Foxconn is taking over the company but remained open about a possible OEM partnership.

A review of Transcends' shareholder structure shows that Transcend and its affiliates hold a stake of over 60% at the company, implying that ties with Foxconn should be limited to a strategic partnership, and not a take over as speculated.

Although Transcend issued NT$25 million (US$758,000) worth of new shares via a private placement in April, company executives said most of the shares were being purchased by existing shareholders. The executives stressed in saying that the company currently has no plans to invite big companies to join it.

Foxconn currently sources DRAM modules from Japan's Elpida Memory, as well as Taiwan's A-Data Technology and Transcend. Whether these DRAM modules are label with the Foxconn brand depends on customer request, the sources pointed out.

Company sources at Foxconn noted that the company's rapid growing sale of own-brand motherboard is prompting a desire for greater quality in associated components. Strengthening partnership with DRAM module makers could meet Foxconn's goal for a more stable complete solution for system integrators (SIs), they explained.

Given that demand for NAND flash is substantial and Foxconn is new to the business, linking with a memory module maker that has a proven position in the NAND flash industry is logical, the sources added. Among major Taiwan memory module houses, Transcend leads in terms of its own-brand NAND flash product sales, with monthly sales (both NAND flash cards and USB drives) having rocketed five fold on year in March of 2007.

By: DocMemory
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