Shares in Powerchip Technology Corp (力晶) rose to nearly the 7 percent daily trading limit yesterday after the stock resumed trading on the local bourse following the completion of a 38 percent capital reduction to NT$56.09 billion (US$1.76 billion) from NT$90.47 billion.
As a result of the capital reduction, Powerchip’s capital shares fell to 5.61 billion and its net value improved to NT$7.06 per share, exceeding the required NT$5 a share in net value for investors to trade Powerchip shares on margins.
At the end of the first quarter this year, Powerchip’s net value reached NT$3.65 a share.
In other words, investors can once again trade Powership Technology shares by borrowing from brokers while using the stock as collateral. The margin trading ban has been in place for the past year.
Powerchip shares jumped by 6.98 percent to NT$8.28 yesterday on the GRETAI Securities Market, after being suspended from trading between Aug. 28 and Sept. 13 in preparation for restarting trading at a new price of NT$7.74 per share.
Company chairman Frank Huang (黃崇仁) reiterated that Powerchip would post a fourth straight quarterly profit this quarter on expectations that the price of PC memory chips, or DRAM, would fall at a measured pace. Huang made the comments in an interview with the Chinese-language Economic Daily News on Monday.
Powerchip made a net profit of NT$10.3 billion, or NT$1.88 per share, in the first half of this year.
In a downward spiral since last quarter, the price of benchmark DDR2 and DDR3 DRAM fell 0.83 percent and 3.96 percent to US$1.92 per unit and US$2.14 per unit, respectively, from the previous trading session, according to Taipei-based research firm TrendForce Corp (集邦科技).
Huang also stressed that the company’s priority was no longer capacity expansion, which has been a main cause of oversupply-driven downturns.
To minimize the volatility of the DRAM business, Powerchip plans to expand further into non-PC memory chips by allocating 40 percent of the company’s overall capacity to contract chip manufacturing and flash memory businesses, he said.
On July 6, Huang told a media briefing that non-PC memory made up 30 percent of its total capacity at that time.
Powerchip said it is supplying driver ICs used in LCD panels and Huang said during July’s media briefing that the firm is supplying driver ICs for Apple Inc’s new-generation of iPhone, dubbed iPhone 4.
Yesterday, Powerchip bought NT$501 million in semiconductor manufacturing facilities and equipment from Applied Materials South East Asia, according to a company filing with the Taiwan Stock Exchange.