Shares of local DRAM chipmaker Nanya Technology Corp (南亞科技) plunged to their lowest in three months on speculation that the firm will slash capital by up to 80 percent in an effort to improve its financial structure.
The stock price of Nanya Technology tumbled by 6.91 percent to NT$4.31 yesterday, versus the TAIEX’s loss of 0.55 percent.
The Chinese-language Commercial Times reported yesterday that Nanya Technology was considering reducing capital by between 60 percent and 80 percent, by canceling capital shares worth as much as NT$192 billion (US$6.32 billion).
Nanya Technology currently has NT$239.6 billion in capital and is the second-largest chip company by capital in Taiwan, after Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), which has NT$259 billion in capital.
TSMC is the world’s largest wafer foundry.
On Monday, Nanya Technology president Charles Kau (高啟全) told reporters the company hopes to resume normal trading this year. Currently, shares may be traded by cash only, as the company’s net value was NT$0.41 per share at the end of last year — well below the threshold of NT$5 per share for margin trading.
The paper said Nanya Technology is scheduled to hold a board meeting on Friday next week to discuss the capital reduction scheme.
The Taoyuan-based chipmaker said in a stock exchange filing yesterday that its board has not yet discussed any plan to trim capital. The company also denied speculation that the board was considering the sale of its chip manufacturing arm, Sumpro Electronics Corp (勝普電子).
In comparison, shares in Inotera Memories Inc (華亞科技), a DRAM joint venture between Nanya Technology and leading US memorychip maker Micron Technology Inc, jumped 1.56 percent to NT$26 yesterday, which analysts said is an indication that investors are more confident in Inotera’s business outlook than in Nanya Technology’s.
In addition, Inotera has a much higher book value of NT$8.13 per share as of the end of December last year, they added.
Nanya Technology swung into earnings per share of NT$0.34 last year, from losses per share of NT$2.24 in 2012, ending seven consecutive years of losses, while Inotera reported earnings of NT$3.66 per share last year, compared with NT$2.95 in losses per share the previous year, according to previous filings and analysts.
Nanya Technology spokesman Lee Pei-ing (李培瑛) said on Monday that the company’s business is expected to pick up in the third quarter and that average global DRAM chip prices might slide slightly this year, as supply is likely to continue lagging behind demand.
“The gap [between supply and demand] will be even wider than last year,” Lee said.
Global supply is expected to grow about 26 percent, while demand could increase about 30 percent as use of DRAM chips expands to a wider range of consumer electronics including mobile phones, computer servers and wearable devices, Lee said.
The market could also gain support from growing stability in demand for PCs, following a significant decline last year, he added.
Global shipments of PCs and notebooks are expected to fall at a slower annual pace of 7 percent to 278 million units this year from last year, when shipments declined 12.32 percent to 299 million units, Gartner Inc forecast.