Mosel Vitelic Inc. said that it is in talks with other rivals about a possible reduction in their output after the freefall in DRAM prices dragged their first-half results into the red. Mosel said today that it lost $201.7 million, more than any other player on the island.

"Our preliminary agreement is to trim some production starting September," said Thomas Chang, a vice president at Mosel, which is a major supplier and owns a DRAM joint venture in Taiwan with Infineon Technologies AG. "People should have disciplines (in arranging their production), since their losses are mounting."

Chang declined to name the companies involved in the talks or how much production would be slashed, saying that Mosel is talking with its customers in hopes they will consent with the planned cut.

Taiwan's DRAM players have been struggling from the global slump, which is due to poor demand and declines in prices.

Now, it has reached a point where they would have to follow some of their Japanese and Korean competitors, which have trimmed production or shut down aging fabs.

Powerchip Semiconductor Corp., which licenses technology from Mitsubishi Electric Corp., says a reduction could be on the way. "People are expecting cuts in production," said Michael Tsai, president of Powerchip, Hsinchu, Taiwan. The company posted a first-half loss of $46.7 million before tax on sales of $222.5 million. Its monthly output surged to 36,000 wafers, compared with 20,000 in the year-ago period.

Still, some analysts questioned whether the move would have any substantial impact on the worldwide market. Taiwan's manufacturers -- most of which operate a fab or two -- control only about 15% of share.

"The worldwide oversupply is still serious and inventories remain high," said Connor Liu, research head of SG Securities in Taipei. "Even if each player in Taiwan reduces its production, it's not enough to boost the slump in DRAM prices."

A significant impact would be possible if Samsung Electronics and Micron Technology, which together dominate more than 50% of market share, take steps to slash production, analysts said. So far, the companies haven't agreed to do so.

Facing the glut, Taiwan's companies are also upgrading their process technologies to help save costs and increase output. They're hoping the soft demand will rebound ahead of the traditional Christmas buying season, raising the 128 MB DRAM price to $3 each.

But that's still below $3.50, the average per-unit cost for Taiwan's DRAM companies, making it urgent for them to slash output to close the gap, analysts said. "Everyone is feeling the need of cutting production," said Charles Kau, an executive vice president with Linko-based Nanya Technology. "As of how to engage in the cut is an issue that needs to be discussed." Nanya is wiling to cooperate in such a cut, he added.

Mosel now runs a 6-inch wafer fab and an 8-inch fab, with capacity of 30,000 wafers and 40,000 wafers, respectively. The company is also set to do pilot engineering run next month at its 12-inch fab facility.