Taiwan stocks drop, VIA leads fall on news of suit

Taiwan stocks fell, led by VIA Technologies Inc (威盛電子), after rival Intel Corp. sued the chipset seller for unlicensed selling of chipsets that are used with Intel's Pentium 4 family of microprocessors.

The TAIEX dropped 13.06, or 0.3 percent, to 4289.10, after sliding as much as 2 percent. Within the index, 308 stocks fell and 141 rose. The total value of shares traded was NT$27 billion (US$779 million), the lowest since Dec. 27 of last year.

"I don't know what the outcome of the suit will be, but it will damage sentiment for VIA," said Steven Hsieh, who manages about NT$2.5 billion in Taiwan stocks at Dresdner Asset Management Taiwan Ltd.

In the very short-term the share price faces huge selling pressure. "VIA Technologies plunged NT$7.50, or 6.9 percent, to NT$101 after Intel Corp, the biggest maker of computer chips and chipsets," said in a lawsuit filed in Delaware that VIA infringed five of its patents by unlicensed selling of chipsets that may be used with Intel's Pentium 4 family of microprocessors.

"The most important thing for motherboard companies is to cooperate with Intel to get Pentium 4," said Simon Chao, who manages NT$800 million in Taiwan stocks at President Investment Trust Corp (統一投信).

VIA rival Silicon Integrated Systems Corp (SiS, 矽統) and Acer Laboratories Inc (揚智), which have a license to sell Pentium 4 chipsets, rose on expectations their earnings will rise as more computer motherboard companies buy their chipsets instead of VIA's because of legal concerns.

SiS rose NT$0.10, or 0.4 percent, to NT$28.30. Acer Laboratories rose NT$0.70, or 2.3 percent, to NT$31.20.

Evergreen Marine Corp (長榮海運) fell NT$0.10, or 0.7 percent, to NT$14.80. Salomon Smith Barney Inc analyst Charles de Trenck expects the stock to slump another 33 percent to NT$10 and predicts the company won't make a profit this year without one-time gains.

Computer parts makers declined after a research report forecast that worldwide PC shipments are expected to decline about 1.6 percent this year, the first such decline since 1985, as demand slows in the US and Japan. Shipments will reach 129.6 million units, compared to 131.7 million last year, according to the report by International Data Corp.

Hon Hai Precision Industry Ltd (鴻海精密), the maker of everything in a computer except chips, fell NT$1, or 0.9 percent, to NT$113. Acer Inc (宏電), a computer maker, fell US$0.30, or 2.2 percent, to NT$13.45. Quanta Computer Inc (廣達電腦), Taiwan's largest notebook computer maker, fell NT$0.50, or 0.6 percent, to NT$79.50.

Memory chipmakers slid as the spot price for their main product remains below the cost of production. The spot price for the 64Mb DRAM chip is at US$0.75, according to DRAM Exchange, a market place for memory chips.

Winbond Electronics Corp (華邦電子) fell NT$1.10, or 6.7 percent, to NT$15.40. Mosel Vitelic Inc (茂矽電子) fell NT$0.65, or 6.7 percent, to NT$9. Nanya Technology Corp (南亞科技) fell NT$0.55, or 4.2 percent, to NT$12.55.

ProMOS Technologies Inc (茂德科技) fell NT$1.20, or 6.5 percent, to NT$17.20.

Leading chipmaker Taiwan Semiconductor Manufacturing Co (台積電) rose NT$1, or 1.6 percent, to NT$64 after the largest contract chipmaker said August sales rose to NT$9 billion from NT$8.6 billion in July.