Fri, Nov 05, 2004 - Page 10 News List

ProMOS confirms talks with Hynix are ongoing

SEMICONDUCTORS The chipmaker denied a report that negotiations between the two companies on technology support were at risk due to the South Korean government


ProMOS Technologies Inc (茂德科技), ranked No. 3 among Taiwan's makers of memory chips for computers, yesterday said it is entering final talks with South Korea's Hynix Semiconductor Inc on jointly developing advanced technologies.

The chipmaker's remarks were in response to a report that co-operation between the two might falter due to concerns of the South Korean government.

"The talks are under way. We just met two days ago," ProMOS Technologies spokesman Albert Lin (林育中) told the Taipei Times in a phone interview. "That report was groundless."

ProMOS Technologies is aggressively seeking new technological support after it severed a long-term partnership with Infineon Technologies AG of Germany in late 2002.

Last week, ProMOS Technologies told investors that it was close to inking an agreement with Hynix, the world's No.2 memory chipmaker, to collaborate in developing both advanced 90-nanometer and more advanced stack-capacitor technologies.

At the time, Lin said they might formally sign a contract by the end of this month.

"We are moving on that schedule," he said.

If the cooperation is secured, ProMOS Technologies plans to produce memory chips in its second 12-inch fab in Taichung, central Taiwan. The new plant, worth US$3.2 billion, is scheduled to ramp up production in the third quarter of next year.

But investors do not consider technology support to be the most pressing issue for the Taiwanese chipmaker, compared to the capital crunch it faces for the construction of a new cost-saving 12-inch factory.

"Capital constraints are more a concern for me," said Paul Tsai (蔡昀達), a fund manager who helps oversee a NT$500 million fund for International Investment Trust Co Ltd (國際投信).

ProMOS Technologies can continue to use existing technologies transferred from Infineon to make chips, until it finds a new technology source, Tsai said.

But, without a fresh and massive capital inflow, ProMOS could run out of cash to carry out the ongoing construction of its new factory in Taichung, he said.

ProMOS Technologies said it plans to raise US$300 million through the issuance of convertible bonds in the first quarter of next year, which is expected to be a slow season for the memory-chip industry.

"It would be a tough task for the company to raise that amount as the industry is dipping into a downtrend," Tsai said. "We believe the budget gap could be huge."

ProMOS Technologies only had NT$16.2 billion cashflow as of the third quarter, while it will need at least US$1.5 billion, or NT$50 billion, for capital expenditure in the second half of next year, when it starts to move in equipment, he said.

In the first three quarters of the year, ProMOS Technologies earned NT$8.2 billion, or NT$1.84 a share, on revenue of NT$32.2 billion.

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