After nearly 30 years of development, Taiwan's DRAM industry has become the third largest in the world with a production value approaching US$4 billion in 2009. However, with the rapidly changing market business cycle during the last few years and the impact of the global financial crisis of 2008 to 2009, Taiwan's DRAM industry has found itself thrown into a crisis management scenario. In fact, the development of Taiwan's DRAM industry is a complex and dynamic process. Taiwan's government, banks, DRAM manufacturers and technical partners play important roles in the long-term accumulation of capital, technology and capacity. In this study, we used system dynamics to explore the system structure for the development of Taiwan's DRAM industry. Our simulation indicates that the effect of the government policy of direct investment in the aftermath of the financial crisis cannot effectively help the long-term development of Taiwan's DRAM industry.