Taiwan's memory-chip makers may have a harder time raising a planned US$700 million in overseas share sales and loans in coming months after their third-quarter losses equaled four-fifths of that amount.
The NT$19.9 billion (US$576 million) in losses reported by Powerchip Semiconductor Corp (力晶半導體), Mosel Vitelic Inc (茂矽電子) and Taiwan's three other memory-chip makers aren't likely to be reversed quickly, even though they're trying to diversify into other kinds of chips. With the global memory-chip market mired in a glut, some investors say only a reduction in the number of companies can restore the business to long-term profitability.
"I hope they merge," said James Liu, who helps manage about NT$1.8 billion in equities for National Investment Trust Co (弘裕財務管理) and sold his stake in Powerchip in September. "They can't return to the black before the third quarter next year." Powerchip, Mosel and ProMOS Technologies Inc (茂德科技), a venture between Mosel and Infineon Technologies AG of Germany, need to sell shares in coming months to finance plant upgrades aimed at sharpening their edge against larger Korean and US rivals.
ProMOS aims to raise US$200 million in an overseas share sale before year-end; Powerchip will seek up to US$300 million in the first quarter of next year and Mosel plans on raising US$200 million over the next eight months through bank loans and a sale of global depositary receipts, spokesmen for the companies said.
In the meantime, they and other memory-chip producers in Taiwan are venturing into other types of semiconductors to weather a market slump. Global sales of memory chips, used in personal computers, are forecast to plunge 61 percent this year to US$11.3 billion.
"Demand has not been there in the last six months," Thomas Chang (張東隆), a Mosel vice president, said in an interview. "We will try to start a joint venture with an international player to fill up one of our plants." The Taiwanese companies, which make about a fifth of the world's memory chips, all reported third-quarter losses this week.
Powerchip, the largest, lost NT$4 billion as sales tumbled by about 75 percent from a year earlier to NT$1.7 billion.
Mosel, the second-largest maker by sales, lost NT$6.2 billion while ProMOS, the third-largest, lost NT$1.9 billion and Nanya Technology Corp (南亞科技) lost NT$3.8 billion.
Winbond Electronics Corp (
While the companies are trying to reduce their reliance on memory chips, new products aren't a sure-fire remedy.
"The best way is probably to do what Powerchip has done," said Lloyd Tsai, who helps manage US$2 billion for Invesco Taiwan Ltd and owns no shares in any of the memory-chip makers. "The company will downsize its memory-chip production and shift about 70 percent of its production into the chip-foundry business." That will put Powerchip into direct competition with Taiwan Semiconductor Manufacturing Co (TSMC,
Mosel has started production of chips that control flat-panel displays. It hopes to reduce memory chips to 65 percent of production, from about 85 percent now, by the middle of next year, Chang said.
Notwithstanding their profit drops, some of the Taiwanese companies expect to outperform rivals such as Korea's Hynix Semiconductor Inc, the world's third-largest memory-chip maker, which is burdened by debt, losses and aging production equipment it can't afford to upgrade.
"We will be among the few companies to profit first," said Albert Lin, a ProMOS spokesman. "We still expect to profit by the second half of next year."
Powerchip and ProMOS are among four memory-chip makers worldwide that have started to build multibillion-dollar plants aimed at cutting memory-chip production costs by as much as 30 percent. The new plants will make larger, 300mm silicon wafers, capable of producing more than double the number of chips that can be made from the current standard-sized wafer.
Even so, the companies have slowed plans to build the plants and postponed sales of new shares to help fund expansion.
"We have deferred installation of equipment to May 2002," Eric Tang (
Tang said Powerchip still hopes to raise as much as US$300 million in next year's first quarter to help fund expansion of the plant, even though the company's falling share price forced it to scrap an overseas share sale earlier this year.
ProMOS plans to raise US$200 million with an overseas share sale this year, Lin said.
Mosel said it hopes to raise US$200 million over the next eight months through bank loans and a sale of global depositary receipts to finance expansion of its jointly owned ProMOS plant, enabling it to make the larger wafers.
AIR SUPPORT: The Ministry of National Defense thanked the US for the delivery, adding that it was an indicator of the White House’s commitment to the Taiwan Relations Act Deputy Minister of National Defense Po Horng-huei (柏鴻輝) and Representative to the US Alexander Yui on Friday attended a delivery ceremony for the first of Taiwan’s long-awaited 66 F-16C/D Block 70 jets at a Lockheed Martin Corp factory in Greenville, South Carolina. “We are so proud to be the global home of the F-16 and to support Taiwan’s air defense capabilities,” US Representative William Timmons wrote on X, alongside a photograph of Taiwanese and US officials at the event. The F-16C/D Block 70 jets Taiwan ordered have the same capabilities as aircraft that had been upgraded to F-16Vs. The batch of Lockheed Martin
US President Donald Trump yesterday announced sweeping "reciprocal tariffs" on US trading partners, including a 32 percent tax on goods from Taiwan that is set to take effect on Wednesday. At a Rose Garden event, Trump declared a 10 percent baseline tax on imports from all countries, with the White House saying it would take effect on Saturday. Countries with larger trade surpluses with the US would face higher duties beginning on Wednesday, including Taiwan (32 percent), China (34 percent), Japan (24 percent), South Korea (25 percent), Vietnam (46 percent) and Thailand (36 percent). Canada and Mexico, the two largest US trading
GRIDLOCK: The National Fire Agency’s Special Search and Rescue team is on standby to travel to the countries to help out with the rescue effort A powerful earthquake rocked Myanmar and neighboring Thailand yesterday, killing at least three people in Bangkok and burying dozens when a high-rise building under construction collapsed. Footage shared on social media from Myanmar’s second-largest city showed widespread destruction, raising fears that many were trapped under the rubble or killed. The magnitude 7.7 earthquake, with an epicenter near Mandalay in Myanmar, struck at midday and was followed by a strong magnitude 6.4 aftershock. The extent of death, injury and destruction — especially in Myanmar, which is embroiled in a civil war and where information is tightly controlled at the best of times —
China's military today said it began joint army, navy and rocket force exercises around Taiwan to "serve as a stern warning and powerful deterrent against Taiwanese independence," calling President William Lai (賴清德) a "parasite." The exercises come after Lai called Beijing a "foreign hostile force" last month. More than 10 Chinese military ships approached close to Taiwan's 24 nautical mile (44.4km) contiguous zone this morning and Taiwan sent its own warships to respond, two senior Taiwanese officials said. Taiwan has not yet detected any live fire by the Chinese military so far, one of the officials said. The drills took place after US Secretary