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Vista will spur memory-chip recovery: ProMOS

ProMOS Technologies Inc (茂德科技), the nation's No. 3 maker of computer memory chips, said yesterday that the company's operations would recover in the third quarter on growing demand for computers that are outfitted with Microsoft's Vista operating system after hitting the bottom next quarter.

Since the beginning of the year, prices of dynamic random access memory (DRAM) chips, which are mostly used in computers, have plunged more than 45 percent to approach most chipmakers' costs because of a market glut.

ProMOS, however, said it would remain profitable for the first three months.

"We will be able to survive if the chip price hovers at US$3 [NT$99] per unit," ProMOS chairman Chen Min-liang (陳民良) said.

The benchmark DRAM chip spot price dropped another 1.3 percent yesterday to average US$2.86, according to market researcher DRAMeXchange.

"We believe the second quarter will be the bottom ? We are positive about the third and fourth quarters," Chen said. "We believe Vista will spur demand."

ProMOS raised its capital spending yesterday to between US$1.5 and US$1.6 billion from the US$1.2 billion originally planned for this year.

The chipmaker also said that it would start pilot production at its US$365 million plant located in Chongqing, Sichuan Province, in the first quarter of next year, three months earlier than originally planned.

The Chinese plant would produce 20,000 wafers a month in the first stage -- mostly for Chinese customers -- to make chips used in small liquid-crystal-display (LCD) panels.

ProMOS shares declined 1.24 percent to NT$11.95 yesterday while the benchmark TAIEX index lost 0.73 percent. The stock share price of ProMOS' parent company, Mosel Vitelic Inc (茂矽), advanced 4.41 percent to NT$35.5.

Mosel said yesterday it was phasing out of the volatile DRAM market and shifting its focus to the higher-margin silicon solar wafer business, according to Jou Chung-shun (周崇勳), a Mosel vice president.

Mosel turned out its first silicon solar wafer this month, Jou said.

Mosel expects the output to be 30 megawatts for this full year.

“Mosel has been searching potential areas for new growth and transformation. We believe the solar industry is an area we can exert our strength,” Jou said.

The gross margin for solar wafer makers could be more than 20 percent, much higher than DRAM chips, he said.
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