Memory chip manufacturers in Taiwan are racing to upgrade their production technology to compete with foreign chip makers.

Powerchip Semiconductor, the world's fourth largest memory maker, will begin cramming more chips onto each silicon wafer with a new 65nm production process that increases output by 15 per cent, according to local press reports.

Along with other improvements, this will help the company increase its output of DRam chips by almost 40 per cent by the end of the year. Powerchip Semiconductor holds approximately 16 per cent of the global DRam market.

Winbond, the only Taiwanese manufacturer to still make and design a wide range of chip types, will spend $1.21bn to add production lines at its memory chip plant in Taiwan, with the aim of increasing capacity by up to 45 per cent next year.

The company is licensing a 58nm production process from Germany's Qimonda.

Promos Technology, one of Taiwan's smaller manufacturers, is also increasing capacity by shifting its remaining production lines to its more advanced 70nm production process this quarter.

The global memory chip market has become increasingly dominated by a handful of giant manufacturers during the past decade, such as Samsung.

Samsung is the world's biggest DRam maker with almost 30 per cent of the market.