Shares of Cheng Uei Precision Industry Co (正崴) surged to a two-and-a-half month high amid speculation that US chip giant Intel Corp was planning to buy a stake in the electronic component maker to secure its supply of computer connectors.
The share price of Cheng Uei rallied 2.71 percent, or NT$1.60, to close at NT$60.60, after retreating from gains in early trading. The closing price was the highest level since April 30, when shares hit NT$60.90.
SECURE SUPPLY
To secure its supply of CPU sockets — an electrical interface on a circuit board that houses a microprocessor — Intel is considering adding one more supplier, Cheng Uei, to complement its existing supplier, Hon Hai Precision Industry Co (鴻海精密), Chinese-language Economic Daily News Daily said yesterday, citing unspecified sources.
Intel also intends to buy a stake in Cheng Uei to strengthen their partnership, the newspaper said. The move would broaden Cheng Uei’s business from mainly handset connectors to PC connectors, the report said.
In response, Cheng Uei denied that it was in talks to sell a stake in the company, according to the company’s filing with the Taiwan Stock Exchange.
Cheng Uei did not disclose any details of cooperation with clients in accordance with non-disclosure agreements signed by the firms.
Last month, the company said it purchased a 15 percent controlling stake in local computer memory module maker Power Quotient International Co Ltd (PQI, 勁永) for NT$913 million (US$28.4 million), to expand its business to the memory module sector.
PROFIT PLUNGE
In the first quarter, Cheng Uei’s net profit plunged 81 percent to NT$44.45 million, or NT$0.10 per share, from NT$236 million, or NT$0.54 a share, in the same period last year, according to the company’s financial statements submitted to the Taiwan Stock Exchange.
However, revenue rose about 12 percent to NT$8.51 billion in the first three months of this year from NT$7.63 billion a year ago.
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