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Elpida Memory falls to record low

“Elpida has opted to boost cash at hand over the past six months, but this will not give it an advantage if government support keeps marginal makers in the game, obstructing the market mechanism.”

— Ikuo Matsuhashi, Goldman Sachs analyst

Elpida Memory Inc, Japan’s largest memory-chip maker, plunged to a record low in Tokyo trading yesterday after Goldman Sachs Group Inc cut its rating, saying government support from Taiwan may keep the market oversupplied.

Elpida dropped 13 percent to close at ¥350 on the Tokyo Stock Exchange, the lowest since the stock was listed in 2004.

Taiwan may buy stakes in memory chipmakers through its National Development Fund (國發基金) to help relieve their funding difficulties, the Chinese-language Commercial Times reported last Thursday.

Taiwan’s five major makers of dynamic random access memory, or DRAM, lost a total of NT$94.8 billion (US$2.9 billion) in the first nine months of this year as a slowing global economy exacerbated oversupply in the industry.

The top five makers — Powerchip Semiconductor Corp (力晶半導體), Nanya Technology Corp (南亞科技), Inotera Memories Inc (華亞科技), ProMOS Technologies Inc (茂德科技) and Winbond Electronics Corp (華邦電子) — are due to pay creditors a total of NT$190.4 billion over the next 12 months, a figure which exceeds their NT$151.3 billion in revenue for the first three quarters, Bloomberg data shows.

Ikuo Matsuhashi, an analyst at Goldman Sachs in Tokyo, cut Elpida’s recommendation to “neutral” from “buy.”

“Elpida has opted to boost cash at hand over the past six months, but this will not give it an advantage if government support keeps marginal makers in the game, obstructing the market mechanism,” Matsuhashi wrote in a note to clients on Tuesday.

Shares of Tokyo-based Elpida have plunged 91 percent this year.

Meanwhile, Elpida and Powerchip, Taiwan’s biggest computer memory chipmaker, will hold a press conference in Taipei tomorrow.

Elpida president Yukio Sakamoto and Powerchip chairman Frank Huang (黃崇仁) will attend the briefing, Powerchip said in an e-mailed statement yesterday.
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