Powerchip Semiconductor Corp (力晶半導體) saw its share prices rally by 6.53 percent yesterday after the nation’s top memory chipmaker said it obtained new capital injection to ease financial pressure.
The Hsinchu-based company has signed an agreement to borrow US$125 million from US memory company Kingston Technology Corp, company spokesman Eric Tang (譚仲民) said in a filing to the Taiwan Stock Exchange yesterday.
Powerchip will use the new funds as its working capital while repaying debts owed to Kingston and Powertech Technology Inc (力成), a memory chip testing service provider in Taiwan, the filing showed.
Powertech Technology, whose biggest stakeholder is Kingston, said in a late night statement on Thursday that the deal was aimed at helping its major customer Powerchip Semiconductor withstand the industry’s severe slump and to help it repay debts smoothly.
The stock price of Powerchip increased NT$0.13 to close at NT$2.12, while rival Nanya Technology Corp (南亞科技) fell 1.82 percent to NT$5.4.
The global dynamic random access memory (DRAM) sector has cut production, reduced investment and fired staff as manufacturers fight the business downturn. Hynix Semiconductor Inc, the world’s second-largest DRAM maker, said yesterday in a regulatory filing that the South Korean firm will spend 2.1 trillion won (US$1.6 billion) on new plants, down from the 3.8 trillion won it had planned, Bloomberg reported.
For Powerchip Semiconductor, the Taiwanese company has been working to persuade investors in its US$158 million overseas convertible bonds to reset the conversion price because it lacked enough cash for repayment. As of Monday, about 96.5 percent of the company’s bondholders had agreed to the new terms, the company said.
In March, Powerchip chairman Frank Huang (黃崇仁) publicly expressed his gratitude to Kingston co-founder David Sun (孫大衛) for the firm support Sun had offered local DRAM chipmakers.
At the time, Huang even criticized the government for comparatively less progress in helping local DRAM companies in the latest downturn.
Despite the share price rally, Powerchip shares are still restricted to cash-only trading on financial concerns. On Wednesday, a report by UBS analyst Robert Lea cut Powerchip’s target price to NT$1.74 from NT$1.93, citing concerns about the company’s financial status and market leadership.
The ban on margin trading is likely to be in place for a while as the net value of Powerchip may fall below the threshold of NT$5 per share after posting one more quarter of losses from NT$5.05 a share in the first quarter of this year as shown in the company’s financial statement.
Powerchip lost NT$6.29 billion in the quarter ending March 31 as chip prices were still below cost levels.
The spot price of benchmark DRAM chips dropped 0.18 percent to US$1.07 per unit, Taipei-based market researcher DRAMeXchange Technology Inc (集邦科技) said.