Tsai Hsung-hsiung, chairman of the Council for Economic Planning and Development (CEPD) , said that under the existing constitutional system, he respects the resolution, but added that the CEPD's role is to act in line with the Ministry of Economic Affairs' policies.

Tsai said any decision to invest NDF money in Taiwan Innovation Memory Co. (TIMC), which was set up to restructure the DRAM industry, will hinge on the prerequisites that TIMC and Japan's Elpida Memory first sign a technology licensing contract and that they form a cross-shareholding alliance.

TIMC, which has yet to begin operations, had planned to incorporate technology from Elpida Memory.

The Executive Yuan has conditionally approved TIMC's request for NT$8.1 billion from the NDF, with NT$4.9 billion in the first stage and NT$3.2 billion in the second stage, the Ministry of Economic Affairs announced a few days ago.

However, legislators across the spectrum are of the opinion that the NDF should not invest in TIMC because DRAM prices have recovered and that there is no need to proceed with the restructuring plan.

The legislature's economics committee therefore resolved that the NDF's investment allocation should not be used for DRAM industry restructuring.

The government had hoped that TIMC would secure badly needed core technologies and bring together some of the sectors' big players, including Powerchip Semiconductor, ProMOS Technologies, and Rexchip Electronics.

Taiwan's DRAM industry has been bleeding money over the past two years because of overcapacity and a slump in demand. It boasts six of the world's top 10 DRAM manufacturers but holds a global market share of only 15 percent.

In an effort to help local chip makers obtain core technologies and expand markets in the face of heavy competition from South Korea, Taiwan authorities devised the TIMC project earlier this year, under which the government would pool the resources of local DRAM companies and their foreign technology partners to develop even more sophisticated DRAM technologies.

(By Lin Su-yuan and Y.L. Kao)