Nanya Technology to raise US$400mn in shares sale

Nanya Technology Corp (南亞科技), Taiwan's largest maker of computer-memory chips, said it plans to sell US$400 million of new shares in the US to help finance a 40-percent increase in spending next year.

The company plans to sell 400 million shares in the form of American depositary receipts for about US$1 (NT$34.9) each, spokesman Moor Chen (陳宏謨) said. That's 62 percent more than today's closing share price of NT$21.50. Nanya hired UBS Warburg LLC for the sale, Chen said.

Nanya needs the cash to make further investments in technology and stay ahead of rivals such as Micron Technology Inc.

It may be seeking too high a price, some investors said. The spot price for 256mb double-data-rate memory chips, made by Nanya and Samsung Electronics Co, has fallen to US$6.27 from a peak of US$8.90 on Nov. 5 as others began making the chips this quarter.

"The share sale will be hard to pull off if memory chip prices are falling," said Arthur Chai, an analyst at Morley Fund Management, which includes Samsung shares among the US$2.5 billion it invests in Asia. "Unless there are signs of consolidation in the industry, it's not an attractive investment."

Nanya expects to be the world's only profitable maker of memory chips alone. The Taiwan company said US investors will prefer its shares to those of Boise, Idaho-based Micron, the only US memory chip maker, which has been unprofitable for two years.

Nanya Technology expects its first-quarter net income will be "about the same" as the NT$1.7 billion projected for the current quarter, Chen said. Net income in the first quarter of this year was NT$1.5 billion.

"The fourth quarter will be our best this year," Chen said.

"Next year's profit should be better than this year because companies will boost spending on computers." Second-quarter profit is projected to exceed the company's estimate for the first quarter, Chen said, without elaborating.