ProMOS reduces its expansion spending as chip prices drop

ProMOS Technologies Inc (茂德科技), Taiwan's second-largest maker of memory chips for personal computers, plans to pare spending on plant and equipment by half this year amid concern about a supply glut and lower prices.

The company will allocate about US$100 million to capital spending, Vice President Albert Lin (林育中) said in an interview. That's half last year's budget and a third of what the company estimated in January it would spend.

The company was the second of five memory-chip makers in the world to operate plants using advanced technology that doubles the number of chips made from one silicon wafer.

The spot price of a benchmark 256MB memory chip fell to US$3.27 yesterday from a 12-month peak of US$8.88 on Nov. 4.

Still, ProMOS plans to increase output by as much as 65 percent this year, a rate it believes will be exceeded only by rivals Elpida Memory Inc and Infineon Technologies AG.

Powerchip Semiconductor Corp (力晶半導體) said it may also delay expansion plans.

"We will check the market," Eric Tang (譚仲民), a Powerchip spokesman, said.

Samsung Electronics Co spent US$2.6 billion last year to increase production of computer memory chips and so-called flash memory chips used in mobile phones and other hand-held products.