Hsuan has said he will likely need NT$30 billion to build TMC, and would also find money among private investors. A government representative said the final monetary figure has not yet been decided.

The decision by TMC to continue talking with Micron and its Taiwan partners, Nanya Technology and Inotera Memories, could be due to the fact Elpida does not make flash memory products, a weakness in its technology portfolio compared to Micron.

"The one disadvantage of selecting Elpida over Micron is that TMC won't get NAND [flash memory] technology since Elpida doesn't have a NAND business," said Nam Hyung Kim, a chief analyst at market researcher iSuppli.

TMC may also find its competitive position weakened once it does move forward with buying up Taiwanese DRAM makers because the downturn has caused them to fall behind in their technology upgrades, he added.

Jim Handy, an analyst at Objective Analysis, said building up revenue will be even more important for TMC than deciding on a technology partner.