Winbond to spin off profitable unit

Winbond Electronics Corp (華邦電子), Taiwan's most unprofitable computer-memory chipmaker, will spin off its non-memory business on July 1, after an oversupply drove prices to a record low last year.

Winbond will separate the profitable non-memory business into a wholly owned company, Wilson Wen (溫萬壽), a company spokesman, said in a telephone interview yesterday. Hsinchu-based Winbond plans to hold an initial share sale for the new company, Wen said, without providing a timetable.

"We're spinning off the operations so the profit from the logic business won't be diluted by losses in the memory division," Wen said.

Winbond reported a loss of NT$5.8 billion (US$189 million) last year, shifting from a profit in 2006, after a glut dragged down the price of memory chips by 85 percent.

The company had a net loss margin of 18.1 percent last year, the worst among Taiwan's five biggest memory chipmakers.

About 35 percent of Winbond's sales come from non-memory chips, used in electronics and computer peripherals including keyboards, Wen said.

The business will have about NT$2.5 billion in capital and be based in Hsinchu, chief financial officer James Wen (溫堅), who is not related to company spokesman Wen, said at briefing in Taipei yesterday.

The company, which will be named Nuvoton Technology Corp (新唐科技), will retain the unprofitable division that makes memory chips used in computers and move its headquarters to Taichung, where it operates a factory that makes memory semiconductors from 12-inch wafers, he said.

Winbond dropped 2.2 percent to NT$8.50 on the Taiwan Stock Exchange, compared with a 0.6 percent decline for the TAIEX.

Winbond's spin-off announcement came after Silicon Integrated Systems Corp (SIS, 矽統) said on Thursday that it planned to spin off three business units in September, as part of its plan to turn a profit.

SIS will set up three wholly owned companies after separating its investment, television and handheld chip businesses on Sept. 1, the Hsinchu-based chipmaker said in a filing to the stock exchange. The company plans to focus on selling PC chipsets.

Shares of SIS lost 1 percent to NT$10.10 yesterday.