With the output of PC DRAM memory from Taiwan-based chipmakers reducing further, their backend partners including Formosa Advanced Technologies (FATC), Walton Advanced Engineering and United Test and Assembly Center (UTAC) will be negatively affected, according to industry sources in Taiwan.

Recent reports indicate that Taiwan's major DRAM chipmakers will undertake cost-reduction measures including layoffs and mandatory unpaid leave in order to survive.

In addition, Inotera Memories' output for Nanya Technology reportedly has reduced since September, the sources indicated. Nanya mainly sources PC DRAM chips from Inotera, but the pace of demand has slowed down, the sources said.

Nanya is looking to expand its presence in the market for specialty DRAM and other niche-market memory chips, while reducing its exposure to the PC DRAM sector. Such developments will initially have an adverse impact on the company's backend suppliers, the sources pointed out.

FATC is Nanya's largest backend service provider. About 40-50% of FATC's revenues are generated from orders placed by Nanya, the sources revealed. Meanwhile, Walton and UTAC both see 20-30% of their revenues come from the orders from Nanya, the sources said.

However, once Nanya successfully transforms itself into a niche-market memory chipmaker, related backed service providers will benefit from more favorable gross margins from the sale of specialty DRAM and other niche-market memory products, the sources believe.

According to UTAC, the firm has gradually lowered its sales ratio for standard DRAM chips to 55% while raising the ratios for flash and non-memory products. Walton has also increased the sales ratio for mobile DRAM and niche-market memory chips to more than 50% in order to mitigate losses from the PC DRAM segment.