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Not surprisingly Steve Appleton, Micron’s Chairman and CEO had a few words to say during its timely earnings conference call last night over the decision by the Taiwanese Government to partner with Elpida on process technology IP, the yet to be established Taiwan Memory Co DRAM enterprise.

As news reports noted yesterday, Micron is still in discussions with the Taiwanese over a possible Micron involvement and I would assume that would be concentrated on any involvement the Taiwanese maybe thinking about for Inotera and Nanya.

But that looks more remote as the days pass as Appleton made it clear that the deal on the table didn’t make business sense, full stop.

“We just haven’t seen any compelling reason yet in terms of benefits for Micron to participate,” noted Appleton.

He went on to say that the deal on the table would have seen cash secured from Taiwan but would have meant giving them Micron’s crown jewels, e.g. process IP.

“I don’t know about Elpida, but we’re not in a position today where we need to get an equity investment from a foreign entity in order and they have to turn over our technology, you know, with other considerations. We just don’t see the advantages for us to do that.”

Of course it helped that Micron is still sitting on a cash pile of just under US$1 billion so isn’t desperate for money…just yet.

Elpida isn’t in that luxury and from Micron’s perspective has much better technology than its rivals. The deal probably also didn’t work from the perspective that the touted cash injection from the Taiwan Government of approximately US$700 million plus, would have been a drop in the ocean for migrating the DRAM 300mm fabs to competitive nodes.

To get from 70nm to 50nm means adopting immersion lithography. That hasn’t happened at any Taiwan DRAM manufacturer due to lack of funds. US$700 million would allow the purchase of between 30 and 40 immersion tools depending on which litho supplier you choose. That might well be enough tools but would still be short of other tools required for the migration.

Other aspects of the deal have yet to be revealed and Appleton wasn’t going to spill the beans, just yet. IMHO, Micron probably went cold on the deal if other restrictions applied in relation to fab ownership. It is well known that Micron likes fire sales to pick-up cheap capacity and this deal probably didn’t give them that kind of deal. More importantly perhaps, it wouldn’t have given them the required control over operations.

I also get the impression Micron is continuing dialogue with Taiwan because it keeps them in the information loop on TMC, should it actually get off the ground. Micron may also spot an opportunity here or there in picking up any victims they may result from the formation of TMC, again with the focus on obtaining cheap capacity.

With respect to Elpida, Appleton’s comments suggest that Elpida didn’t have much choice and that the deal wouldn’t do much for them down the road. On that point we will have to wait and see.

That said, a combination of PSC, Elpida, ProMOS still isn’t big enough to compete with the likes of Hynix and Samsung without Inotera and Nanya, and that simply isn’t going to happen now or in the near future, IMHO.

From that perspective Micron has probably been astute enough to walk away from the current deal on the table. The sour grapes could come later if TMC proves to be successful.