Few details were offered about the sudden move, which was made public on Friday. Officials at Taiwan's Mosel-Vitelic and Infineon were not available for immediate comment.

An official at ProMOS said if Infineon carries through with the termination, then ProMOS would be responsible for 48 percent of its capacity, up from 10 percent now. Mosel-Vitelic takes up the remaining 52 percent. In the past, Infineon had used 38 percent and taken on some of ProMOS' 10 percent as well.

Such a change could present huge problems for ProMOS, which does not have the extensive marketing and distribution channels of Infineon, nor its brand-name recognition. For similar reasons, it would be difficult for Mosel-Vitelic to take on the additional capacity.

Additionally, Infineon also supplies trench technology know-how to ProMOS and no details were offered about whether that arrangement - which extends to 0.11-micron -- was threatened. There were also no details available about whether Infineon would dispose of its 28 percent stake, although analysts considered that unlikely given the sagging prices of DRAM stocks.

Sources within ProMOS said Infineon didn't want to give up its capacity rights, and, in fact, wanted more capacity to meet its goal of expanding market share. The pull-out was viewed as a way to renegotiate its deal with Mosel-Vitelic, which owns nearly 40 percent of ProMOS' shares.

Analysts said Infineon is unhappy with the possibility that Mosel-Vitelic may start selling of its shares to meet bond commitments that come due early next year. "That action would make Infineon unhappy because it would hurt the independence of ProMOS," said Rick Hsu, a semiconductor analyst at Nomura Securities in Taipei. Infineon might not be willing, or able, to commit cash to buying any shares Mosel-Vitelic might put up for sale if it fails to raise money by other means, such as issuing more shares.

The eyebrow-raising turn of events comes just as ProMOS is getting a handle on manufacturing 300-mm wafers using 0.14-micron technology. It was the first company in Taiwan, and the second worldwide, to ramp up a 300-mm wafer fab. The Taiwan DRAM maker runs also runs a 200-mm wafer facility.

The news also follows a recent spree of alliance building in Taiwan by Infineon. They have struck deals with Winbond Electronics - capacity for technology -- and Nanya Technologies - a joint venture, 300-mm wafer -fab that will likely come online in 2004. Infineon also recently increased its share stake in ProMOS Technologies.

ProMOS estimates that it had nearly an 8 percent market share last quarter, with about half of that going to Infineon.