The decision to work with Elpida was made weeks ago even as the head of TMC, John Hsuan, flew to both Japan and the U.S. to discuss alliance with Elpida and Micron, according to a source close to the situation.

But on Wednesday, Hsuan announced that TMC is still seeking a technology pact with Micron as well.

Neither Elpida nor Micron could be immediately reached for comment.

TMC is Taiwan's answer to a global recession that caught its DRAM industry in an already weakened position due to a chip glut that hit a year earlier. The government had discussed several ways to aid its memory chip makers, including a plan to inject up to NT$100 billion (US$2.95 billion) into the companies as well as working with banks to extend deadlines on loan repayments.

In the end, the government chose one of its original ideas, to force the most indebted chip makers to combine into a single company.