NAND flash memory controller supplier Phison Electronics Corp (群聯電子) yesterday said it is considering making a NT$26 billion (US$849.65 million) contribution to a group of investors looking to acquire Toshiba Corp’s memorychip unit, to show its support for its debt-ridden Japanese partner.
Phison, about 10 percent owned by Toshiba, said it has formed a strong partnership with the Japanese firm over the past decade and it “would not be absent” from Toshiba’s divestment of its memorychip unit.
Phison was informed about the spinoff when Toshiba made the decision before the Lunar New Year holiday in February, the company said.
Phison said Toshiba told it to be ready with an unspecified amount of capital.
Toshiba supplies NAND flash memory chips to Phison.
“We will lend a hand to Toshiba as we have promised, given our long-term partnership,” Phison chairman Pua Khein-seng (潘健成) told investors at an earnings conference in Taipei. “We will not rule out the possibility of making an investment, if necessary.”
The company might seek to raise NT$5 billion to NT$6 billion via offering 20 million shares via a private placement and aim to raise another NT$10 billion to NT$20 billion by selling corporate bonds, Pua said.
Because of the planned investment, Phison said it has proposed distributing a cash dividend of only NT$14 per common share this year, representing a payout ratio of about 57 percent, he said.
The company distributed a NT$24 dividend last year.
“No matter which investors clinch the deal, Phison will be among them,” Pua said. “There is a slim chance that only a single investor wins [the bid].”
He declined to comment on whether Toshiba had reserved a certain share of its memorychip unit for Phison and dismissed speculation that Toshiba might sell its Phison shares in a bid to alleviate its financial problems.
Meanwhile, Pua said he expects NAND flash memory chip prices to undergo a correction this quarter following a price surge amid a supply crunch.
“The rapid hikes are smothering demand as material costs have become too expensive,” Pua said. “Some Chinese smartphone brands have lowered their equipment loading rate to between 10 percent and 20 percent to reduce losses.”
A moderate price decline would help restore market order in the second half, he said, adding that NAND flash memory supplies would remain tight throughout the year.
Phison reported NT$2.68 billion in gross profit and a 24.19 percent gross margin for the final quarter of last year.
The figures for last quarter might hit record levels, thanks to an increase in NAND flash prices and higher contribution from high-margin flash memory modules for automobiles, Pua said.
However, a strong New Taiwan dollar would likely erode the company’s earnings by NT$1.5 per share in the first quarter, he said.
Pua said he expects non-operating gains from other areas to help offset the erosion.
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