Thu, Dec 18, 2008 - Page 12 News List

Nanya Tech considers filing request for help

THINKING IT OVER The company’s stock exchange filing didn’t say what type of government aid it might need and did not elaborate on its own rescue plan

By Jerry Lin and Kevin Chen  /  STAFF REPORTERS

Nanya Technology Corp (南亞科技), the nation’s No. 2 computer memory chipmaker, said yesterday it was cautiously evaluating the necessity of requesting government aid.

The company’s remark, shown in a stock exchange filing, came one day after the Ministry of Economic Affairs (MOEA) voiced its support for the domestic dynamic random access memory (DRAM) sector.

It also came in response to a Chinese-language newspaper report yesterday that Nanya Technology and its bigger rival Powerchip Semiconductor Corp (力晶半導體) would both soon submit their self-rescue plans to the ministry in exchange for the government’s assistance.

If the company did apply for government aid, Nanya would become the third DRAM company, following ProMOS Technologies Inc (茂德科技) and Powerchip, to make the move as the nation’s top-five DRAM makers reported total losses of NT$93.87 billion in the first nine months of this year.

Nanya, however, didn’t say what type of government aid it needed and did not elaborate on its own rescue plan, the filing showed.

On Tuesday, Vice Minister of Economic Affairs Shih Yen-shiang (施顏祥) told a press briefing that Taiwanese DRAM makers needed to first seek industry consolidation and jointly develop advanced technology here in Taiwan with their foreign partners if the financially troubled sector wanted to obtain government aid.

According to Citigroup’s estimates and based on various stock exchange filings as of Nov. 8, Powerchip, Nanya and ProMOS reported respective debts (including short-term and long-term debts due in one year) of up to NT$42.7 billion, NT$9.3 billion and NT$16 billion respectively. In comparison, these firms each had NT$9.9 billion, NT$192 million and NT$2.2 billion in cash outstanding in the mean time.

Citing no specific information and without providing funding specifics, Citigroup analyst Timothy Lam said the government’s call for industry consolidation should help prices recover, as the current spot price is 50 percent below local makers’ cash costs.

Investors welcomed the news and sent shares of major DRAM companies higher yesterday. Powerchip’s shares edged up 1.93 percent to close at NT$3.7 on the GRETAI Stock Market yesterday. On the Taiwan Stock Exchange, shares of ProMOS ended 6.47 percent higher at NT$1.81, Nanya rose 3.9 percent to NT$5.6 and Inotera Memories Inc (華亞科技) remained unchanged at NT$7.62.

ProMOS would become the first beneficiary of the government’s rescue plan, as Shih said the government aid was crucial to the economy and aimed to enhance the local DRAM sector’s global competitiveness.

But when asked whether the government was against collaboration with South Korean DRAM makers, he said at the briefing that “the government is leaning toward strengthening the nation’s cooperative relationship with the US and Japan.”

In other words, foreign DRAM makers such as South Korea’s Samsung Electronics Co and Hynix Semiconductor Inc are excluded from the government’s list of favored foreign partnership for local DRAM companies.

In this case, the US’ Micron Technology Inc and Japan’s Elpida Memory Inc appear to be the two most likely candidates to collaborate with local DRAM companies or to take the cash-strapped ProMOS, the nation’s No. 3 DRAM maker, under their wing.

“Absent a sharp price rebound, Taiwan players may need to become subsidiaries of Japanese or US firms to keep pace with Samsung’s technology migration,” Citigroup’s Lam wrote yesterday.

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