Memory chip maker Mosel Vitelic plans to fund development of new products with a US$150 million sale of convertible bonds.
The securities could be sold within a week, Mosel said. Although the company said it has not received permission from Taiwan securities regulators, Jardine Fleming Securities Ltd has already begun to find buyers for the bonds.
"We definitely intend to invest in some projects we feel are important to the company, including an additional design house and building up systems-on-a-chip capability," said spokesman Thomas Chang.
While the DRAM memory chip sector -- Mosel's core business -- is currently booming, diversification into other types of chip will help the company weather a predicted downturn in the cyclical DRAM business. Last year, Hsinchu-based Mosel began to move into the lucrative market for flash memory chips, currently in high demand in products such as digital cameras and digital music players.
The DRAM industry has just begun to climb out of a two year slump, and observers believe the next downturn is at least two years away.
The so called system-on-a-chip is the central component of low-cost, application specific computing devices -- often referred to as information appliances. The integrated product combines many of the functions of a PC, including CPU, graphics, network interface and sound on a single chip, drastically cutting costs. Most analysts believe these devices have the potential to sell in the tens of millions, and may eventually outstrip sales of traditional PCs.
The five-year bonds will be convertible into shares of Pro MOS Technologies Inc, a maker of dynamic random access memory chips that trades on Taiwan's Over-the-Counter Securities Exchange. Mosel owns just under half of Pro MOS, while Siemens AG unit, Infineon Technologies AG owns about a third.
Under the terms of their venture, Mosel's stake in Pro MOS must not fall below 36 percent.
Pro MOS, which may begin adding new production capacity later this year, is considering a domestic rights offering or other fund raising measures, Chang added.
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