Thu, Apr 16, 2009 - Page 11 News List

Price of memory chips rises again

By Lisa Wang  /  STAFF REPORTER

The spot prices of computer memory chips rebounded for the second straight day yesterday amid production cuts by chipmakers to cope with a downturn of more than two years, giving a boost to share prices of the nation’s major memory chip suppliers to the spot market.

Shares of Powerchip Semiconductor Corp (力晶半導體) and ProMOS Technologies Inc (茂德科技) jumped 4.66 percent and 4.35 percent to NT$5.17 and NT$1.44 respectively after the spot price started rising in the morning trading session.

Extending the rise, the spot prices of the mainstay dynamic random access memory (DRAM) DDR2 ETT 1GB gained 6.99 percent yesterday to average US$1.13 per unit, taking a step closer to most companies’ cost of US$1.20 to US$1.50 per unit, Taipei-based market researcher DRAMeXchange Technology Inc’s (集邦科技) real-time online price report said.

Powerchip, which sells about 70 percent of its chips to the spot market, has said it plans to curtail 80 percent of its production capacity, and will not start restoring production before an expected severe shortage arrives in the second half of the year.

The stock price of Nanya Technology Corp (南亞科技), the nation’s No. 2 DRAM maker, dropped 2.88 percent to NT$8.36. Nanya primarily sells its memory chips to computer makers such as Dell Inc on contract basis.

The contract price is expected to hold steady in the first half of this month because of excessive inventory, despite DRAM makers attempts to raise prices by more than 5 percent from two weeks ago, DRAMeXchange said in a report released on Tuesday.

The top three PC makers have kept high inventory level between six and eight weeks, DRAMeXchange said, citing unnamed sources.

With DRAM makers facing mounting cash outflow pressure as memory chips trade below their cost level on persistent supply glut, they may slash capital spending by 56 percent this year to total US$5.4 billion from last year’s US$12.2 billion, the latest survey by DRAMeXchange said.

To improve financial structure, Nanya board members are scheduled to discuss a capital reduction plan via canceling outstanding shares tomorrow. Speculation circulated that the chipmaker may slash capital by 30 percent to 50 percent.

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