Fri, Jun 22, 2007 - Page 11 News List

Chipmaker shares rise, outperform local bourse

RACING AHEAD Nanya Technology saw its stock rise 3.5 percent yesterday to NT$29.80, while Powerchip Semiconductor Corp gained 2.3 percent to NT$20.40

STAFF WRITER , WITH BLOOMBERG

Shares of computer memory chipmakers outperformed the local main bourse yesterday on signs that chip prices have bottomed out.

Inotera Memories Inc (華亞科技), the most profitable Taiwanese computer-memory maker, saw its stock jump 5.5 percent to close at NT$42.20 yesterday, after the price of dynamic random access memory or, DRAM, computer chips jumped to a six-week high.

Nanya Technology Corp (南亞科技), the nation's second-largest memory-chip maker, rose 3.5 percent to NT$29.80, while Powerchip Semiconductor Corp (力晶半導體), the largest, gained 2.3 percent to NT$20.40.

Spot prices of the benchmark 512-megabit DRAM chip rose 4.1 percent to US$2.30 yesterday after surging 17 percent on Wednesday, according to Taipei-based DRAMeXchange Technology Inc (集邦科技), Asia's biggest spot market for chips.

"We believe DRAM will start to bottom out from the end of June and money will continue to move into the sector," Vincent Chen, an analyst at SinoPac Securities Corp (永豐金證券), wrote in an investment note yesterday. "DRAM shares have been underperforming the TAIEX."

SinoPac set its target prices of NT$24.3 for Powerchip, NT$32 for Nanya, and NT$16 for ProMOS Technologies Inc (茂德科技). ProMOS closed at NT$13.5 in Taipei.

Elsewhere, Samsung Electronics Co, the world's largest maker of computer memory, saw share prices rise 2.1 percent to 589,000 won and Hynix Semiconductor Inc jumped 7.3 percent at the close in Seoul. Elpida Memory Inc gained 4.4 percent in Tokyo.

DRAM prices rose partly because some Taiwanese manufacturers are having difficulty producing chips from so-called 70-nanometer technology, said Lee Min-hee, an analyst at Dongbu Securities Co in Seoul. A nanometer is 1 billionth of 1 meter and measures the width of transistors in a chip.

"Having production problems means that there will be a slowdown in supply growth," Lee said. "The supply environment is changing to a more favorable one."

Production problems have occurred at some suppliers of DRAM chips because of delays in upgrading the companies' manufacturing plants, said Jocelyn Chen, a spokeswoman for Dramexchange. She declined to identify the firms beyond saying they are Taiwanese.

Powerchip spokesman Eric Tang (譚仲民) said the company isn't having any production problems as it is manufacturing 70-nanometer chips out of "thousands" of silicon wafers each month.

Manufacturers scaling back production is helping chip prices to stabilize, said James Song, an analyst at Good Morning Shinhan Securities Co in Seoul.

Chipmakers may be shifting some production capacity to flash memory, which is used to store songs and pictures in music players and cameras, Song said.

"Concern that supply may be tight in the second half seems to be pushing up demand from DRAM buyers," Song said. "There may even be a shortage later in the second half."

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