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Powerchip chairman released

The Supreme Prosecutor's Office yesterday released Powerchip Semiconductor Corp (力晶半導體) chairman Frank Huang (黃崇仁) on NT$10 million (US$326,000) bail following a raid on the memory chipmaker's offices and Huang's detention on suspicion of insider trading.

Shares of the nation's biggest computer-memory chipmaker fell to their lowest in four months.

Powerchip investment adviser Huang Jiunn-chin (黃俊欽) and Macronix International Corp (旺宏電子) vice general manager Wang Yao-tung (王耀東) were also released on NT$2 million and NT$500,000 bail respectively.

The three were summoned on Wednesday over possible use of inside information in trading Macronix shares in late 2005, leading to a NT$560 million profit for Huang, Macronix director Chen Hung-chih (陳鴻智) and "related people," prosecutors said.

Yesterday's drop was the second time in a year that Hsinchu-based Powerchip tumbled after Huang was questioned on suspicion of insider trading.

Powerchip, which owns less than 1 percent of Macronix, fell 5.3 percent to NT$11.65, while Macronix, a chip supplier to Nintendo Co, dropped 6.4 percent to NT$13.15.

"This is another blow to the already ailing Powerchip stock because of the falling prices of the products it sells," said Eric Yao, who helps manage US$152 million at Truswell Securities Investment Trust Co (富鼎投信) in Taipei. "I wouldn't touch the stock before a ruling or before the company turns to a profit."

Powerchip posted record losses last quarter as an industry oversupply drove down chip prices by 85 percent last year. The stock has dropped 16 percent this year, compared with a 3.5 percent decline for the TAIEX index.

The latest share trading took place in November 2005, before the two companies said Powerchip agreed to buy a vacant factory from Hsinchu-based Macronix in January 2006, prosecutors said on Wednesday.

Powerchip spokesman Eric Tang (譚仲民) said yesterday that the Macronix stake was bought to get the firm involved in the management of its smaller rival.

Holding the shares for some 16 months, Powerchip started selling the stock in June last year after failing to win control of the Macronix board, Tang said.

But he said the accusations of insider trading were strange because Macronix shares did not rise significantly after Powerchip's purchase of the stock, although Powerchip did profit from it later.

Huang is also the chairman of Taichung-based Veutron Corp (力廣科技), a Powerchip affiliate.

Executives, including Huang, sold shares before Veutron disclosed on April 25, 2002, that its book value shrank to half the paid-in capital, the Taichung Prosecutors' Office said on March 16 last year, the day after authorities searched the affiliate's offices.

The prosecutors' raid prompted the biggest one-day drop in Powerchip's stock in two weeks, while shares of Veutron fell by the daily limit.

The Taipei District Prosecutors' Office, which took over the Veutron case, decided in December that it wouldn't press charges against Huang because the actions "didn't constitute insider trading," spokesman Lin Chin-chun (林錦村) said by phone yesterday.
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