Wed, Nov 05, 2003 - Page 10 News List

Powerchip plans to boost spending to NT$30 billion

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Powerchip Semiconductor Corp (力晶半導體), Taiwan's third-largest maker of computer-memory chips, plans to double spending to as much as NT$30 billion (US$881 million) next year to increase the output of its most advanced wafers.

The company plans to produce 35,000 12-inch wafers a month, up from 15,000 at present, spokesman Eric Tang (譚仲民) said in a phone interview. Hsinchu, Taiwan-based Powerchip, which is building a second 12-inch wafer plant with a projected capacity of 40,000 wafers, has a budget of NT$15 billion to NT$18 billion for this year, depending on its equipment payment schedule, he said.

The dinner-plate sized wafers yield more than double the number of chips that can be cut from a standard 8-inch disk, reducing production costs.

Powerchip had its first profit in five quarters after sales almost tripled and the company cut costs by shrinking its chips and using the bigger wafers.

"The cost benefits are starting to show up in the company's results, so the expansion plans will give it a chance to become a leading chipmaker on the island," said Jonah Chen, an analyst at Taipei-based Yuanta Core Pacific Securities Co (元大京華證券), Taiwan's biggest brokerage. Chen has a "buy" recommendation on the stock.

Powerchip turned to third-quarter net income of NT$1.3 billion from a loss of NT$1.1 billion a year ago. In September, the company raised US$205 million selling new shares and bonds convertible into its stock to overseas investors.

Powerchip, which plans to build an 8-inch wafer plant in China, has yet to set a timeframe and work out the cost, Tang said.

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