Winbond Electronics Corp (華邦電子), Nanya Technology Corp (南亞科技) and other companies that make computer memory chips soared on optimism that Hynix Semiconductor Inc may close, alleviating an oversupply of chips that has driven prices below the cost of production.
Winbond, the nation's biggest computer memory chipmaker by market value, rose as much as 6.7 percent to NT$12.80 in early trading. Nanya Technology, the second-largest, rose 6.7 percent to NT$10.40. Mosel Vitelic Inc (茂矽科技), which yesterday said it had sufficient money to pay for bonds and bank loans, rose 6.5 percent to NT$6.60.
Yesterday, Hynix said it would cut its wage bill by forcing employees to take unpaid leave to cut costs as it seeks a US$5.4 billion bailout from creditors, its second multibillion dollar rescue in four months. Last Friday, the third-largest computer memory chipmaker said it had a bigger-than-expected 1.6 trillion won (US$1.2 billion) third-quarter loss.
"If Hynix goes out of business, the oversupply will be turned into an undersupply," said Rick Hsu, an analyst with Nomura Securities Co.
The closure of Hynix, which has about a 17 percent share of the computer memory chip market, would have a bigger impact on clearing the chip oversupply than the closure of some of Taiwan's chipmakers, which together account for about 16 percent of the market, Hsu said.
"Why bother to have one or two companies in Taiwan go out of business? Why not just get rid of this giant?" Hsu said.
Global sales of computer memory chips are likely to fall 67 percent to US$10.5 billion this year as computer sales shrink and consumer demand ebbs following last month's terrorist attacks in the US, according to research firm Dataquest Inc.
Meanwhile in Seoul, Hynix said it would slash 20 percent of its overseas' staff to help stem losses as it confronts a cash squeeze.
The restructuring helped lift the embattled chip maker's shares by more than 5 percent early on Friday before surrendering those gains.
"This is a show of endurance," said a Hynix official who declined to be identified.
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