Powerchip looking to boost spending

Powerchip Semiconductor Corp (力晶半導體), the nation's biggest maker of computer memory chips, yesterday said it planned to increase spending by 16 percent for this year to accelerate its diversification into the fast-growing market for flash memory chips used in consumer gadgets.

The decision was made after Powerchip inked an agreement yesterday with Japanese partner Renesas Technology Corp to transfer advanced technology for flash memory chip production with bigger storage than the Taiwanese firm makes now.

The new contract represents a big step for Powerchip as it rapidly diversifies into the flash memory chip market to capture massive business opportunities, Powerchip said in a statement.

"To boost capacity to meet growing demand for high-density flash memory chips and computer chips, Powerchip also decided to increase capital spending to NT$70 billion (US$2.18 billion) for this year," Powerchip said in a statement.

Powerchip had planned to double its spending on new equipment to NT$60 billion for this year compared with NT$30 billion last year.

Powerchip chairman Frank Huang (黃崇仁) said the company was following in the footsteps of global competitors such as Samsung Electronics Co in an attempt to benefit from the fast-growing flash memory chips market.

Global revenues of flash memory chips would grow 25 percent year-on-year to nearly US$14 billion this year, outpacing 10 percent annual expansion for computer memory chips to US$28 billion, market researcher International Data Corp said.

Flash memory chips are used in a wide range of electronic gadgets, including Apple Computer Inc's popular digital music player i-Pod series and mobile phones.

Powerchip led local peers in tapping into flash memory chips with technological support from Renesas. But the company said it would develop its own technologies after Renesas ceased investing in developing technologies for making flash memory chips with larger storage.

Powerchip's latest increase in capital expenditure would greatly boost monthly output at a new plant purchased from local flash memory chipmaker Macronix International Co (旺宏電子) in January this year to 20,000 wafers a month from 10,000-15,000 wafers, Powerchip said.

The NT$5.3 billion plant is set to start commercial production of flash memory chips in the fourth quarter of the year, the chipmaker said.

By the end of this year, flash memory chips will still account for only 10 percent of Powerchip's total output for the preceding 12 months.

Powerchip shares jumped 3.21 percent to NT$22.5 yesterday on the over-the-counter GRETAI Securities Market, while rival Nanya Technology Corp (南亞科技) shares were unchanged at NT$20.6 on the Taiwan Stock Exchange.