Fubon Financial Holding Co (富邦金) said yesterday its life insurance and banking subsidiaries have sizable exposures to LCY Chemical Corp (李長榮化工) and its affiliate Taiwan Polysilicon Corp (福聚太陽能), but both can absorb the potential losses.
Fubon Life Insurance Co (富邦人壽) is a major shareholder in LCY Chemical with 58 million shares in the petrochemical product supplier, whose market value has shed NT$10 billion since the fatal gas pipeline explosions in Greater Kaohsiung on July 31 and Aug. 1, Fubon Life’s senior vice president Raymond Lin (林立民) told an investors’ conference in Taipei.
LCY Chemical is suspected of being to blame for causing the explosions that killed 30 people and injured 310.
Photo: CNA
LCY Chemical is the largest shareholder in loss-making Taiwan Polysilicon, which is negotiating debt payments for a syndicated loan of NT$10.7 billion, with Taipei Fubon Commercial Bank (北富銀) acting as the lead creditor.
The decline in LCY Chemical’s share price erodes 7 percent of Fubon Life’s unrealized equity investment gains that stood at NT$70 billion on June 30, Lin said.
“The losses, even if realized, are limited and bearable,” Lin said.
The insurer does not plan to sell its LCY Chemical stake or book the losses in the short term, Lin said, adding that the investigation into the explosions may take years, with more parties likely to be involved and have to pay a share of the compensation claims.
Fubon Financial president Vivien Hsu (許婉美) said the conglomerate decided keep the stake after consulting accountants over the legality and financial implications of the issue.
“We believe it is better to be patient when things are in a fluid state,” Hsu said.
That patience was seemingly rewarding when LCY Chemical shares closed up by the daily 7 percent limit at NT$14.25 yesterday, after a 45.3 percent plunge over the past month, compared with with TAIEX’s 1.99 percent correction, Taiwan Stock Exchange data showed.
LCY Chemical had a net worth of NT$16.18 per share as of June 30 after posting NT$11.52 billion in losses, or a loss per share of NT$9.2, according to stock exchange filings.
That was after booking a NT$6.7 billion loss linked to its stake in Taiwan Polysilicon, the filings said.
Taipei Fubon Bank has NT$1.14 billion in secured loans to Taiwan Polysilicon, company vice president Mike Liu (劉明藩) said, higher than 13 other peers, such as Cathay United Bank (國泰世華銀行), E.Sun Commercial Bank (玉山銀), DBS Bank and CTBC Bank (中信銀).
As the cash-strapped company has previously managed to honor its debt payments, Taipei Fubon Bank has so far only set aside a 10 percent provision, he said.
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to