Shares of Powerchip Semiconductor Corp (力晶半導體) got a brief boost from recent speculation that the nation’s biggest computer memory chipmaker may reverse its position and consider teaming up with government-backed Taiwan Memory Co (TMC, 台灣記憶體公司) amid financial pressure.
Powerchip stock prices ended down 5.66 percent to NT$2, retreating from a 2.83 percent gain in the morning trading session yesterday. The benchmark TAIEX plunged 3.53 percent.
Powerchip wouldn’t rule out the possibility of supplying computer memory chips, or dynamic random access memory, to TMC if the government-funded company were to become a distributor without operating plants, the Chinese-language Economic Daily News reported yesterday, citing senior officials at Powerchip.
“Powerchip almost has no other option because of financial difficulties. Cooperation with TMC may provide a possible way out,” said Liu Szu-liang (劉思良), a semiconductor analyst with Yuanta Securities and Investment Consulting (元大投顧).
Liu said the partnership may help Powerchip digest its output and may help it diversify into non-PC memory areas by obtaining new technologies from Elpida Memory Inc, which was chosen as TMC’s technological partner.
Last week, Powerchip obtained US$125 million in loans from US memory company Kingston Technology Corp and local memory chip tester Powertech Technology Inc (力成), which will help it increase working capital and repay debts.
“We have not approached TMC yet. It is almost impossible for us to have such talks with a company that doesn’t exist,” Powerchip spokesman Eric Tang (譚仲民) said by phone yesterday.
Powerchip has criticized TMC’s plan to acquire chips from local DRAM companies in exchange for new technologies to solve long-term problems of oversupply and lack of technology.
Powerchip said the industry would soon return to a normal market mechanism after demand exceeds supply this quarter.
“If Powerchip insists on its hardline stance, it will gradually lose financial support from its current partners, who are seeking partnerships with the government-financed chip company,” Liu said.
Powerchip has offered to repay US$158 million in convertible bonds in cash and common shares, which would cost the Taiwanese chipmaker NT$2 billion (US$60.4 million). Powerchip had about NT$6.09 billion in cash as of March 31, the company’s financial statement filed to the Taiwan Stock Exchange showed.
The Ministry of Economic Affairs said TMC may need less than NT$10 billion in startup capital. The ministry did not give a timetable for the company’s formation.