ProMOS shares plunge on Elpida report

CHANGE OF PLANS::The ‘Nikkei’ said Elpida had decided not to invest in the company, although DRAM prices have risen recently on easing oversupply and low inventories

By Lisa Wang  /  Staff Reporter

Fri, May 13, 2011 - Page 12

The price of ProMOS Technologies Inc (茂德科技) stock yesterday tumbled by its daily limit amid media speculation that capital injections from Japanese chipmaker Elpida Memory Inc had fizzled out.

Shares of the local DRAM maker plunged 6.67 percent to NT$0.98, the lowest since hitting NT$0.92 on June 6, 2009, after the Nikkei business daily reported yesterday that Elpida would back down on its plan to invest in ProMOS to avoid financial risks.

Elpida chief executive Yukio Sakamoto had said more than once that the company intended to deepen its partnership with Taiwanese DRAM companies to topple industry leader Samsung Electronics Co from the No. 1 spot.

Hsinchu-based ProMOS reported a loss of NT$4.26 billion (US$149 million) for the first quarter, according to the financial statement filed to the Taiwan Stock Exchange. As of March 31, it had accumulated NT$69.85 billion in debt, while owning NT$74.48 billion in assets.

ProMOS sidestepped questions as to whether it was in talks to sell a stake to the Tokyo-based chipmaker.

“We are exploring cooperation [opportunities] in other areas [other than supplying chips to Elpida],” ProMOS spokesman Ben Tseng (曾邦助) said by telephone. “It is premature” to talk about selling equities to Elpida, he said.

Tseng said the chipmaker planned to sell up to 3.5 billion shares via private placement to bring in strategic partners.

“Companies from Taiwan and the US have shown interest in subscribing for the company’s shares last year in an aborted share sale. We will approach them first this year,” he said.

Tseng said that he did not mean to exclude Japanese companies from the shortlist, but wanted to avoid igniting more speculation.

The new fund-raising program would need approval from shareholders in an annual meeting scheduled for June 10.

ProMOS supplies DRAM chips to Elpida using technologies from the Tokyo-based company. It was joined by local rival Powerchip Technology Corp (力晶科技) earlier this year as both companies failed to generate enough cash flow to invest in developing advanced and cost-efficient technologies.

Shares of the nation’s two biggest DRAM companies, Nanya Technology Corp (南亞科技) and Powerchip, yesterday rose 0.37 percent and 1.67 percent to NT$13.4 and NT$5.49 respectively, as chip prices rebounded on easing oversupply.

The contract price for benchmark DDR3 2GB DRAM chips rose 2.74 percent in the first two weeks of this month from two weeks ago, market researcher TrendForce Corp (集邦科技) said in a report issued on Wednesday.

A further uptick is expected in the second half of this year on falling supply and PC makers’ low inventories, the Taipei-based researcher said.