Elpida TDRs dive on loan repayment delay


CNA

TAIPEI — Taiwan depositary receipts (TDRs) of Japanese chipmaker Elpida Memory Inc. took a beating Friday morning after the Japan news media reported that the company might seek a delay of its loan repayment to the government, dealers said.

Fears that the financial difficulties of the world’s third largest dynamic random access memory (DRAM) chip firm will get worse also affected shares of Powerchip Technology Corp., a Taiwanese partner of Elpida, dealers said.

Memory chip testing and packaging service providers such as Powertech Technology Inc. also came under pressure as Elpida is one of their major clients.

As of 11:25 a.m., Elpida’s TDRs had fallen 6.04 percent to NT$6.85 (US$0.23), with 1.36 million shares changing hands. Powertech had dropped 3.02 percent to NT$64.20, while the benchmark weighted index was down 0.11 percent at 7,066.36 points.

Powerchip plunged by the maximum daily of 7 percent to NT$0.86 on trading volume of 9.96 million shares. Meanwhile, the index of the over-the-counter market, where the stock is listed, was up 0.05 percent at 94.00 points.

According to the Japanese media, Elpida was likely to seek a delay to repay its loan of about 30 billion Japanese yen (NT$12 billion) from the government.

The chipmaker received the funds from the Development Bank of Japan for business restructuring as the global DRAM sector was facing weakening demand and falling product prices. It was scheduled to repay the loan by April 2012, the report said.

“The news report clearly indicates that even large DRAM makers like Elpida cannot escape the impact of the market’s down cycle,” said Horizon Securities analyst Benson Huang.

The price of the benchmark DDR3 2-gigabit DRAMs has fallen more than 50 percent so far this year, according to Dramexchange Technology, a Taipei-based market advisory firm.

“While DRAM prices have staged a technical rebound in recent weeks, demand remains weak and the industry is still facing tremendous uncertainty,” Huang said.

The most pressing problem for Elpida is whether it can survive by obtaining new funding after its massive losses of more than 56 billion Japanese yen in the six months to September, he said.

“It is possible that the DRAM business will continue to post losses since the risks are getting higher,” Huang said.

Elpida issued TDRs on the Taiwan Stock Exchange in February.