The deal, should it be made final, would ensure ProMOS's survival past a major bond redemption this week and keep DRAM prices from rising. Last month, German DRAM maker Qimonda filed for bankruptcy protection, sending DRAM prices up over 25 percent in a week. DRAM makers have suffered from a nearly 2-year downturn caused by a chip glut, and many companies have posted losses for at least a year.

The Taiwanese banks plan to loan ProMOS NT$3 billion (US$88.2 million), a smaller figure than the NT$5 billion ProMOS was seeking. The deal will not be finalized until boards of directors at each bank approve their respective portion of the loan.

The Bank of Taiwan has pledged NT$700 million of the total amount.

ProMOS needs the cash to pay up to US$330 million in expected redemptions of a convertible bond. The redemption was originally due to begin on Feb. 14, but since that date fell on a Saturday, it was delayed. Since Monday was a U.S. holiday, the redemption officially began Tuesday. ProMOS has seven days to make the payments.

Failure to meet the payment schedule could leave the chip maker with few alternatives but to seek protection from its creditors, analysts say. ProMOS has already lobbied business partners and the Taiwan government for funds to help it through this crisis, and only this eleventh-hour deal with banks may have saved the day.