Powerchip rebounds after initial concerns


TAIPEI — Shares of memory chip maker Powerchip Technology Corp. staged a strong rebound yesterday, outperforming the broader market, after the company expected its bottom line for the first quarter will improve from a quarter earlier, dealers said.

The comments helped to quell market fears that the company would report a larger amount of net loss during the January-March period, compared with NT$8.86 billion (US$300 million) in net loss recorded a quarter earlier, at a time when the dynamic random access memory (DRAM) chip business has been in a down cycle, they said.

Shares of Powerchip closed up 5.56 percent at NT$0.95 with 4.39 million shares changing hands, while the index of the over-the-counter market, where the stock is traded, fell 1.49 percent at 107.45 points amid lingering worries over a proposed capital gains tax on stock investments.

The stock fell 5.26 percent a session earlier amid market speculation that the DRAM maker would report massive net losses for the first quarter after booking the losses incurred by Rexchip Electronics Corp, a joint venture with financially troubled Elpida Memory Chip of Japan.

In a filing to the Taiwan Stock Exchange, Powerchip said it expects its losses to be narrowed down to less than NT$6 billion for the first quarter, while its accountants are auditing the financial statement.

The company said its core business is estimated to incur a loss of about NT$5 billion for the first quarter, and after including the losses posted by Rexchip, its consolidated losses could be narrowed down to less than NT$6 billion from the fourth quarter’s NT$8.86 billion.

The company is scheduled to release its first quarter results by the end of this month.

Market analysts said the improving bottom line was the result of Powerchip assigning part of its production capacity to the profitable foundry business.

According to advisory firm Gartner, Powerchip ranked as the world’s 10th largest foundry service provider last year. Dealers said the clarification did help to calm down many investors, but concerns over the global DRAM sector’s fundamentals remained in place.

There are rising concerns that further losses in the DRAM business will drag down these chip makers’ book values, they said.

At the end of September, Powerchip’s book value stood at NT$3.51 per share.