Shares of Mosel Vitelic Inc (茂矽電子), a venture partner in the nation's second-largest memory-chip maker, plunged after the company said it will negotiate today for new terms on debt maturing this month.
Mosel shares in Taipei fell by the 7 percent daily limit to NT$3.98, the lowest since the stock started trading in September 1995, on questions about how the company would repay NT$4.7 billion (US$135 million) of debt.
Mosel had NT$755 million in cash at the end of the third quarter.
Mosel's financial problems stem from its failure to diversify from computer-memory chips, whose prices are unprofitable for most suppliers. The only companies to make money last year were South Korea's Samsung Electronics Co, the largest supplier, and Nanya Technology Corp (南亞科技).
"We're concerned about Mosel," said Frank Kuo (郭恭克), who counts Mosel bonds among the equivalent of US$3.3 billion in corporate debt he helps manage for Fubon Securities Investment Trust Co (富邦投信).
Mosel will hold a formal meeting with bondholders on April 28 on repaying debt, Kuo said.
Mosel has pledged shares in venture ProMOS Technologies Inc (
Mosel has failed to make good on plans to lessen its dependence on the computer-memory chip business, according to Chris Hsieh (
The company lost Japan's Sharp Corp as a customer for chips that control flat-panel displays and hasn't been able to sell semiconductors in China, which the company expected to be a key market, he said.
"None of Mosel's dreams have come true in the last four to five years," Hsieh said.
Nanya last month said it expects the number of suppliers in the US$16 billion computer-memory chip industry to fall by half in four years to about five companies because high investment costs will drive out all but the biggest competitors.
Mosel this year took over ProMOS, a computer memory-chip venture started with Germany's Infineon Technologies AG, the world's fourth-largest memory-chip maker.
Mosel started selling ProMOS's output this year after Infineon scrapped purchase and technology pacts with ProMOS. Mosel owned 35 percent of ProMOS in January.
Infineon on Jan. 11 said it would sell its entire 30 percent stake in ProMOS a day after three of its officials were removed from the venture's board. Infineon currently owns about 25 percent of the company.
Infineon said it ended agreements with ProMOS in part because Mosel was using its stake in the venture as collateral for debt.
Standard & Poor's withdrew its rating on Mosel's long-term debt. In November, S&P downgraded Mosel's rating to CCC+ from B-, both junk grade.
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