Powerchip Technology Corp’s (力晶科技) board has approved plans to sell all of the firm’s DRAM output to Elpida Memory Inc, making the Tokyo-based memory chipmaker its sole customer, the company said yesterday.
To help it navigate through the DRAM industry’s boom-and-bust cycle, Powerchip, the nation’s second-biggest DRAM maker, said it would also receive technological know-how from Elpida to make DRAM chips for mobile devices. It is a strategy that has also been adopted by its local competitors Nanya Technology Corp (南亞科技) and Inotera Memories Inc (華亞科技) as part of their efforts to diversify their products from PCs.
By the end of the year, half of its 300mm capacity would be used to make non-PC DRAM chips — including CMOS image sensors, NOR flash and LCD driver ICs — up from less than 10 percent at the end of last year, Powerchip said.
“The new business model will help stabilize the company’s DRAM business, which will not be as -volatile as it used to be, and could lead to a stable cash flow and bottom line for the company in the long run,” Powerchip said in a statement after the board approved the renewal of an agreement with Elpida.
The new agreement would help the company save a large amount in royalties payments and would cut outlay for technology transfer, it said.
“Basically, we’ll sell all of the DRAM chips made in our factories and from that of Rexchip [Electronics Corp (瑞晶電子)] to Elpida,” company spokesman Eric Tang (譚仲民) said by telephone. “We still own the facilities and equipment.”
Rexchip, based in central Taiwan, is a DRAM joint venture between Powerchip and Elpida.
“This is probably the last resort for Powerchip to stay in the market, as it is running out of cash and losing customers,” said Liu Szu-liang (劉思良), a DRAM analyst with Yuanta Securities and Investment Consulting (元大投顧).
“As Powerchip is now just a capacity supplier to Elpida as most local firms used to do, I just do not see any growth potential for Powerchip,” Liu said.
Powerchip’s board also approved plans to issue 400 million new common shares via private placement, according to a filing to the Taiwan Stock Exchange.
The proceeds will be used to purchase equipment, buy raw materials, repay debt and replenish its operating capital.
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