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Powerchip leads chip shares higher on prices prediction

Powerchip Semiconductor Corp (力晶半導體), the nation's largest maker of computer memory, rose by the daily limit on the market yesterday, leading shares of memory-chip makers higher after Asia's biggest spot market for chips predicted prices would rise.

Powerchip, Taiwan's biggest maker of dynamic random access memory (DRAM) chips, rose by 6.9 percent to close at NT$13.20, its largest gain since October 2004. Nanya Technology Co (南亞科技), the nation's second-largest memory-chip maker, and Elpida Memory Inc, the biggest in Japan, also advanced.

Benchmark 512-megabit DRAM prices rose 1.1 percent, Dramexchange Technology Inc (集邦科技) said.

"A probable price rebound has finally appeared," Dramexchange wrote in a report dated Tuesday.

"This comes in the wake of manufacturers adjusting their production plans based on the changing market conditions," it said.

Makers of the chips expanded capacity last year in anticipation of strong demand spurred by the introduction of Microsoft Corp's Windows Vista operating system, which requires more DRAM for computers to function.

Sales of Vista failed to meet expectations this year, analysts said.

"They were too optimistic on Vista," said Joyce Yang (楊雅欣), an analyst at Dramexchange in Taipei.

"DRAM makers knew there'd be oversupply, but no one dared cut supply for fear of losing market share," she said.

Nanya shares climbed 6.8 percent, its daily limit, to NT$18.85 in Taipei trading, beating the 0.3 percent advance for the benchmark TAIEX index.
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