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Powerchip announces venture

Powerchip Semiconductor Corp (力晶半導體), Taiwan's top computer memory chipmaker, said yesterday it would form a three-way venture with Japan's Renesas Technology Corp and Sharp Corp to design chips used in liquid-crystal displays (LCDs) for consumer electronics.

Powerchip will hold a 20 percent stake in the venture, to be known as Renesas SP Drivers Inc, a joint statement said. Renesas and Sharp will hold shares of 55 percent and 25 percent respectively.

Renesas SP Drivers, which will have ¥5 billion (US$46.7 million) in capital, will design, develop and sell drivers and controllers used in consumer electronics such as mobile phones and digital photo frames, Powerchip said.

The company is set to begin operation on April 1.

The joint venture will produce cost-competitive products in an increasingly competitive, fast-growing market, the statement said.

"The deal will provide a way for Powerchip to better utilize its 8-inch factory [which cannot make PC memory chips cost competitively] ... although the gross margin for LCD drivers and controllers is not impressive," said Rick Hsu (徐稦成), a senior research analyst at Nomura Securities Co Ltd (野村證券).

The Hsinchu-based chipmaker said late last month that its board had agreed to spin off its less advanced 8-inch plant to independent subsidiary Maxchip Semiconductor Corp (鉅晶電子). This would allow Powerchip to focus on its computer memory and flash memory businesses, the company said at the time.

The plant makes about 35,000 8-inch wafers a month for customers including South Korean Hynix Semiconductor Inc and Taiwan's Chi Lin Technology Co (奇菱科技).

Shares of Powerchip and local rival ProMOS Technologies Inc (茂德科技) rose 0.8 percent and 2.78 percent to NT$12.55 and NT$7.76 respectively, supported by a rebound in the computer memory price to above US$2 apiece from previous lows as a result of a supply glut.

The stock price of the nation's second-largest computer memory chipmaker, Nanya Technology Corp (南亞科技), fell 0.29 percent to NT$17.05 yesterday after the Chinese-language Commercial Times reported that high-ranking officials from US memory company Micron Technology Inc had visited the Taiwanese company for takeover talks.

In response, Nanya Technology said yesterday that companies had approached it to talk about possible collaboration, but no agreements had been reached. It declined to comment on weather Micron was one of the interested parties.

"It's too early to comment on any mergers yet," Nomura's Hsu said.

But such a deal would have a negative affect on Nanya's business and stock price, Hsu said.

Nanya fabricates memory chips using trench technology from partner Infineon Technologies AG, while Micron adopts stack technology, he said.
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