Thu, Jan 22, 2009 page12

• Chip stocks jump on rumors of merger

  DENIAL An NHK report that Elpida was in final talks for a merger with ProMOS and two other Taiwanese firms boosted local stocks. One of the firms denied the rumor

  • By Lisa Wang / STAFF REPORTER
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  Shares of Powerchip Semiconductor Corp (力晶半導體) and ProMOS Technologies Inc (茂德科技) rallied near their 7 percent daily limit yesterday on news that Japan’s top memory chipmaker, Elpida Memory Inc, was considering a four-way merger involving the two Taiwanese chipmakers.

  The stock price of Taiwan’s top computer memory chipmaker, Powerchip, jumped 6.97 percent to close at NT$3.07, while ProMOS’ rose 6.34 percent to NT$1.51, outperforming the benchmark TAIEX, which inched up 0.13 percent.

  Shares of the nation’s No. 2 computer memory chipmaker, Nanya Technology Corp (南亞科技), were unchanged at NT$5.62 after reporting losses of NT$10.67 billion (US$318 million) in the fourth quarter, its second-biggest quarterly losses.

  In Tokyo trading, shares of Elpida, the world’s third-largest maker of dynamic random access memory (DRAM) chips used in mobile phones and home electronics, climbed 2.3 percent to close at ¥545.

  Earlier yesterday, Japan’s public broadcaster NHK reported that Elpida was in the final stages of talks to merge operations with ProMOS and two other unidentified Taiwanese companies amid plummeting demand in the semiconductor sector.

  The NHK report didn’t identify the other two companies or say where it obtained the information, but speculation was rife that it was referring to Powerchip and Elpida-joint venture Rexchip Electronics Inc (瑞晶電子).

  “While it is true that we are in talks with Taiwanese chipmakers, nothing has been decided at the moment,” said Hideki Saito, a spokesman at Elpida, in a report by Bloomberg yesterday.

  Powerchip, however, dismissed the rumors.

  “It’s old news. We are not pushing for such a consolidation. The only consolidation plan we have is the one we proposed to the government the other day,” Powerchip spokesman Eric Tan (譚仲民) told the Taipei Times by telephone.

  Industry sources said that Elpida had been trying to bring the four chipmakers together to create one big DRAM supplier that can rival South Korean chipmaker Samsung Electronics Co.

  “Companies have been discussing all kinds of consolidation options, including the four-way merger. Pushing for a [four-way merger] plan is likely,” a source at a local DRAM company told Taipei Times on condition of anonymity because of the sensitivity of the matter.

  Late last month, Powerchip and Rexchip jointly submitted an industry consolidation and bailout proposal to the Taiwanese government, but the Ministry of Economic Affairs rejected the plan. The companies did not disclose the content.

  Earlier this month, beleaguered ProMOS filed its consolidation plan, in collaboration with both Rexchip and Elpida, to the government in hopes of obtaining assistance to avoid bankruptcy.

  The government also turned down ProMOS’ proposal and told the company to revise it. A company official said yesterday the firm was still trying to reach a consensus among the companies involved in the proposal.

  ProMOS said in a stock exchange filing yesterday that it had sold a piece of property to Kingston Technology Co for US$15 million to repay loans to a US memory chip company based in Fountain Valley, California.

  Last week, ProMOS sold NT$580 million in manufacturing equipment to Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s biggest contract chipmaker, as part of its efforts to raise capital before its US$330 million overseas corporate debt matures on Feb. 14.

  Unnamed government officials suggested last week that ProMOS’ creditors, led by the Bank of Taiwan (臺灣銀行) and Taiwan Cooperative Bank (合作金庫銀行), continue financing local DRAM makers through a loan-equity conversion scheme.

  But Bank of Taiwan chairwoman Susan Chang (張秀蓮) said yesterday that the state-owned bank had no interest in securing stocks of cash-strapped high-tech firms, including ProMOS, to ease their financial strain.

  “If the bank were to invest, we would not consider non-financial businesses but consider options we’re familiar with,” Chang said.

  Additional reporting by Crystal Hsu
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