Nanya Technology Corp , the nation¡¯s second-biggest maker of computer memory chips, yesterday said it expected to raise chip prices this month, extending a rebound with growth in the double digits amid a supply shortage.

Chipmakers have maintained low output as they struggle to survive the industry¡¯s worst downturn yet. Almost all chipmakers have cut production drastically to control financial damage amid weak demand for PCs.

Nanya hiked prices for DRAM chips by between 15 percent and 20 percent last month over April.

¡°As supply is pretty tight on the contract market, we think there is more room for further upticks in the following two or three months ... There¡¯s a likelihood of briefly hitting US$2 per unit,¡± Nanya Technology spokesman Pai Pei-lin told reporters on the sidelines of the company¡¯s annual shareholder¡¯s meeting yesterday.

Demand in emerging markets ¡ª China in particular ¡ª looked relatively promising, underpinned by robust computer sales to consumers, Pai said. In the US and Europe, demand was sluggish because of weak replacement purchases by corporations, he said.

Nanya Technology expects to raise contract prices this month after negotiation with customers, with the price hike somewhere in the double-digit percentage range month-on-month, Pai said.

Nanya Technology supplies DRAM chips to computer makers including Dell Inc and Hewlett Packard Co, which buy memory chips on a contract basis.

On the spot market, the price of benchmark DRAM chips fell by 3.05 percent to US$1.2 per unit, reversing a previous upturn on speculation that supplies could increase sharply after the nation¡¯s top DRAM supplier, Powerchip Semiconductor Corp, rapidly restored production in April.

Powerchip sells approximately 70 percent of its chips on the spot market. The memory chipmaker said two weeks ago that it halved unpaid leave to four days a month from eight starting last month.

¡°We are worried that a dramatic output increase could stifle the nascent recovery in prices, leading to a murky third quarter [outlook],¡± Pai said.

Nanya Technology¡¯s shareholders approved a proposal to raise new funds by selling no more than 4 billion shares via private placement and offering a of maximum 4 billion common shares at home or overseas while canceling 66 percent of capital shares.

Nanya plans to raise almost NT$15 billion (US$463 million) by the end of this month and another NT$10 billion at the end of this year, Pai said.

The chipmaker plans to use the proceeds primarily to procure new equipment to make chips on next-generation, or 50 nanometer, technology, which would help it cut costs by about 50 percent.

Shares of Nanya Technology and Powerchip fell 4.13 percent and 6.87 percent yesterday to NT$5.8 and NT$4.34 respectively.

By: DocMemory
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