Thu, Jul 31, 2003 - Page 10 News List

Powerchip hoping to cash in on rising memory-chip prices

BLOOMBERG

Powerchip Semiconductor Corp (力晶半導體), Taiwan's third-largest maker of computer memory chips, forecast its first profit in three years because of rising prices, which analysts said should help the company's fundraising plans.

Hsinchu-based Powerchip expects NT$138 million (US$4 million) of net income this year as the average price for the most widely used memory chip rises to more than US$5 in the fourth quarter, the company said in a statement.

Powerchip plans to sell up to US$350 million of shares and bonds in the fourth quarter, according to chairman Frank Huang (黃崇仁). Powerchip may fall short of its target even after its profit forecast, analysts said.

"Frank is always bullish about fundraising," said Rick Hsu (徐禕成), an analyst with Nomura Securities. "Anything less than US$200 million is possible."

The company's forecast may indicate the memory-chip industry is recovering from a more than two-year slump in demand for personal computers, the main users of the semiconductors. The only memory-chip makers to post profits last year were South Korea's Samsung Electronics Co, the world's No. 1 supplier, and Nanya Technology Corp (南亞科技), Taiwan's biggest maker.

Powerchip will probably exceed its profit target for this year, said Hsu, who's forecasting NT$648 million in net income for Powerchip this year. Taiwanese suppliers are benefiting from being among the first in the world to offer so-called DDR400 memory chips that work with new semiconductors from Intel Corp to speed the operation of personal computers.

Powerchip said it expects to post a second-quarter loss of NT$900 million before returning to profit in the second half. The company had a NT$2 billion loss in the three months ended March 31, following annual losses of NT$1.5 billion last year and NT$6.4 billion in 2001.

Powerchip plans to more than double its production of 12-inch silicon wafers to 36,000 a month by the end of next year. The company has one 12-inch wafer factory in operation, which it expects to be producing 15,000 wafers a month by the end of this year.

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