Dresden, Germany - Efforts to find a new owner for Qimonda, the German manufacturer of memory chips for computers and phones, have suffered a new blow after a Chinese contender pulled out, a newspaper report said Tuesday.

The Saechsische Zeitung said the Inspur group had dropped plans for a complete takeover of Qimonda because of a decline in demand for microelectronic products caused by the global economic crisis.

Jiang Daming, the governor of the Chinese Province of Shangdong, where Inspur is located, disclosed the news in a letter to the government of the German state of Saxony, where the insolvent chipmaker has its main factory.

But the Chinese official left open the possibility of cooperating with the German company in various technological sectors, the news report said.

Inspur was the last main hope to salvage Qimonda, a subsidiary of chipmaker Infineon, and take over its laboratories, semiconductor production lines and 4,600 German staff.

Insolvency proceedings for Qimonda began in Munich on April 1. The company at one time employed 12,000 people worldwide but suffered from a massive drop in prices of memory chips used in computers, games consoles and cellphones stiff as well as competition from Asia. (dpa)