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Powerchip earns NT$212 million from share sale

Powerchip Semiconductor Corp (力晶半導體), the nation's biggest maker of computer memory chips, said yesterday it earned NT$212.3 million (US$6.48 million) by selling 35 million shares in rival Macronix International Co (旺宏電子).

Macronix makes flash memory chips that are primarily used in game consoles such as those made by Japan's Nintendo Co. In a statement filed with the Taiwan Stock Exchange yesterday afternoon, Powerchip said it sold Macronix shares between Tuesday and yesterday at NT$15.84 per share for a total of NT$555.1 million.

The Hsinchu-based company said it will use the proceeds from the share sale for working capital, without elaborating.

The announcement of the share sale came after the local stock market closed.

Shares of Powerchip fell 0.47 percent to NT$21.25, while Macronix saw its stocks fall 0.32 percent to NT$15.80. This was compared to an increase of 1.23 percent on the benchmark TAIEX.

Powerchip had increased its holdings in Macronix to a 5.34 percent stake since last year in view of rising demand of flash memory, which is used in consumer electronics and laptop computers to help retain data even when the electronic device is turned off.

It also wanted to secure a controlling power in the small rival's boardroom.

But on June 29, Powerchip obtained only two seats on the 15-member board of Macronix during the boardroom election, missing its original goal of eight board seats.

Following this share sale, Powerchip will remain the single biggest shareholder of Macronix with a 3.64 percent stake, according to the company's filing.

Powerchip reported NT$5.83 billion in revenue last month, a decline of 13.92 percent from NT$6.42 billion a year earlier. For the first six months of the year, the company's revenue reached NT$46.17 billion, up 37.55 percent from the same period last year, the dynamic random access memory (DRAM) chipmaker posted earlier this month.

The company is expected to report a second quarter loss because of weak prices from a glut in memory chips, analysts said earlier. Powerchip reported NT$7.53 billion profit, or NT$1.1 per share, for the first quarter of the year.

Earlier this week, both Credit Suisse and Macquarie Equity Research upgraded Powerchip to “outperform” from “underperform.”

Macquarie gave a target price of NT$26.3 for Powerchip, citing improving memory chip prices and earlier-than-expected inventory restocking by both PC and channel vendors.

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