March 5 (Bloomberg) -- Taiwan, producer of more than 20 percent of the world’s computer-memory chips, named John Hsuan, honorary vice chairman of United Microelectronics Corp., to oversee the formation of a state-owned semiconductor maker.

Taiwan Memory Co., in which the government will hold a stake of less than 50 percent, will talk to six Taiwanese chipmakers about a possible merger, Economics Affairs Minister Yiin Chii-ming said today at a press conference in Taipei. The government will seek private investors for the venture, he said.

The industry’s biggest overhaul since 1999 may lead to the shuttering of older plants to ease a glut and help smaller chipmakers compete against Samsung Electronics Co. as they cope with the market’s longest contraction in more than a decade. The global recession is threatening to prolong the slump as personal-computer shipments are projected to fall by a record 12 percent this year.

The new company may merge with either Japan’s Elpida Memory Inc. or U.S.-based Micron Technology Inc., according to Yiin.

To contact the reporters on this story: Chinmei Sung in Taipei at csung4@bloomberg.net;

Last Updated: March 5, 2009 00:47 EST