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Elpida trades higher on share-sale plans at two subsidiaries

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Elpida Memory Inc gained the most in four months in Tokyo trading after the company said two subsidiaries planned to sell ¥45.8 billion (US$467 million) in new shares, helping bolster the parent’s capital.

Elpida, Japan’s biggest maker of computer memory chips, climbed by its daily limit of ¥100, or 18 percent, to close at ¥657 on the Tokyo Stock Exchange, the biggest advance since Nov. 26.

The Tokyo-based company, which posted a fifth straight quarterly loss in the three months ended Dec. 31, is seeking financing as the global recession curbs consumer spending, hurting demand for chips that go into electronics such as computers and handsets. The share sale will help shore up Elpida’s net assets and avoid early repayment of loans.

“The share sale helps allay investor concerns about Elpida’s financials, turning their attention to business fundamentals,” said Yuichi Ishida, an analyst at Mizuho Investors Securities Co in Tokyo. Ishida has a “neutral” rating on Elpida stock.

EBS Corp plans to sell ¥30.8 billion in preferred shares, while ECM Corp intends to issue ¥15 billion in preferred stock and ¥91 million in common shares, Elpida said on Wednesday. Both companies are wholly owned by the chipmaker.

Elpida had ¥109 billion in bank loans as of Sept. 30 and arranged a credit facility for ¥110 billion in October. The chipmaker’s net worth totaled ¥347.9 billion in the year to last March.

The new shares will be underwritten by Elpida and three Japanese and two overseas clients, the chipmaker said, without identifying the buyers. The partners are believed to be Shin-Etsu Chemical Co, Toppan Printing Co, Advantest Corp, Kingston Technology Co and Powertech Technology Inc (力成), the Nikkei Shimbun reported yesterday, without saying where it obtained the information.

Separately, Powerchip Semiconductor Corp (力晶), Taiwan’s biggest maker of memory chips, jumped 6.9 percent in Taipei trading after the company said supply of the devices would be tight starting next month and there would be a shortage from the third quarter.

Makers of computer memory worldwide have cut supplies by 44 percent since the final three months of last year, the company said on Wednesday.

Hynix Semiconductor Inc, the world’s second-largest memory chipmaker, saw its shares rise 15 percent after the Ichon, South Korea-based company said it expected a “significant” reduction in chip supply this year.

“The fourth quarter may have been the bottom” of the chip-industry slump, chief executive officer Kim Jong-kap said at the annual meeting of shareholders yesterday. “The second half will get better compared with the first, but it will still be a difficult year as a whole.”

Kim reiterated that Hynix had no plans to seek further funding after UBS AG said last week the chipmaker may need to raise 1.5 trillion won (US$1.1 billion) in funds this year because its cash reserves would run out in the third quarter.

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