The global credit crunch has worsened the situation for DRAM companies by making loans harder to come by. DRAM makers need billions of dollars to build new chip factories and hundreds of millions to upgrade existing chip lines to the latest technology.

Analysts have expected a deal between Elpida and Powerchip for some time because Powerchip needs cash to continue paying back loans on the chip factories it has built in recent years.

The Elpida-Powerchip deal comes on the heels of another DRAM deal in Taiwan this week.

On Wednesday, two Taiwanese companies agreed to loan Micron Technology, of Boise, Idaho, US$285 million to partly pay for Qimonda's stake in Taiwan's Inotera Memories.