Sat, Feb 11, 2006 - Page 10 News List

Nanya plans sale to fund growth

EXPANSION PLANS The chipmaker will sell shares in Europe to raise cash for the construction of a new 12-inch wafer plant in northern Taiwan later this year

By Lisa Wang  /  STAFF REPORTER

Nanya Technology Corp (南亞科技), Taiwan's No. 2 maker of computer memory chips, plans to raise NT$10 billion (US$309.91 million) by selling new shares overseas later this year to finance its first wholly-owned advanced plant, a company official said yesterday.

The new plant, which will be located in northern Taiwan, will process 12-inch wafers to make memory chips with a width of 70 nanometers, said Moor Chen (陳宏模), a vice president of Nanya Technology, at a luncheon with reporters.

The larger wafers yield more than twice as many chips than the standard 8-inch variety, helping chip makers slash production costs and offer competitively priced products.

"We plan to build our third plant [a 12-inch factory] in March and a fundraising project will follow in the second half of this year," Chen said.

The company plans to offer 400 million new shares in the form of global depositary receipts (GDRs) traded in Luxembourg, Chen said.

That implies that each Nanya Technology share would be priced at NT$25, representing around a 16 percent premium, compared to the stock's closing price of NT$21.25 yesterday on the Taiwan Stock Exchange.

Nanya Technology plans to invest NT$80 billion in the new cost-saving factory to expand production amid robust demand, primarily for DDR2 (second-generation double data rate) memory chips, Chen said.

"We are falling short of customer demand for DDR2 by as much as 40 percent at the moment," Chen said.

Nanya Technology now supplies memory chips to the world's major computer vendors, which include the global top brand Dell Inc.

The shortage in supply will boost DDR2 prices by over 20 percent this month compared with last, he said.

DDR2 memory chips rose to an average of US$5.32 per unit in the spot market yesterday, according to market research company DRAMeXchange.

The company's new factory will start mass production by the end of next year with an initial monthly output of 24,000 wafers which would rise to a maximum output of 60,000 wafers a month by 2008, the company said.

Nanya Technology now has two 8-inch plants and owns 45 percent of a 12-inch plant through a joint venture with German Infineon Technologies AG Inotera Memory Inc (華亞科技).

Inotera is building its second 12-inch plant now, which is scheduled to ramp up production by the end of this year.

For the capacity expansion, Nanya Technology has more than doubled this year's capital expenditure to US$200 million, compared to US$80 million last year.

Inotera is also undertaking a fund-raising project for the second fab through an initial public offering (IPO) on March 17 and GDR issuance in April, according to Chen.

Before the IPO, Inotera plans to issue 200 million new shares, he said.

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