Shares of Nanya Technology , Winbond Electronics and other computer-memory chipmakers surged yesterday after prices of their key product rose, which in turn helped push the benchmark TAIEX to a three-and-a-half-year high.
Analysts said memory-chip shares would continue the trend on solid February sales and improved profitability thanks to higher chip prices.
"The rise of the memory-chip sector is playing a role in the TAIEX's surge, as is the influx of foreign capital," said Kevin Chung, a deputy manager at Jih Sun Securities Investment Consulting Co.
Winbond led the rise, surging nearly 7 percent, the intraday limit, to NT$19.4. Nanya, the nation's biggest memory chipmaker, and smaller rival ProMOS Technologies advanced 3.46 percent and 3.37 percent to NT$26.9 and NT$18.4, respectively.
"The DRAM sector has been one of the most vigorously traded sectors since the beginning of the year, along with flat-panel shares," Chung said.
Improved profitability and lower stock prices, below NT$50, are two important reasons for investors to snatch up those shares to make profits from the bullish stock market, he said.
Boosted by the strong DRAM shares, the TAIEX yesterday breached the 7,000-point resistance level to end at 7,034, on turnover of NT$226.55 billion.
Frank Huang chairman of Powerchip Semiconductor , the nation's No.2 memory chipmaker, said in late January that he expected this year's revenue to double from last year thanks to sharp growth in chip output and cost savings, after its advanced 12-inch fabs started operating in the second half of last year.
Powerchip's revenues for last year amounted to NT$22.9 billion, up from NT$12.7 billion in 2002. The company's sales last monthh were a record high NT$3.31 billion, it reported earlier this week.
ProMOS, which reported a record NT$3.2 billion in sales last month, expects the figure to continue to expand this month.
"In March, ProMOS will hit a new record, helped by rising chip prices and more working days," said ProMOS spokesman Albert Lin.
Spot prices are expected to go up slightly for the first half of this month as demand usually picks up in March after a slow January and February.
The benchmark DDR 256Mbit has risen 1.13 percent to US$4.47 in the past week, according to online chip clearinghouse DRAMeXchange.
Looking forward, DRAMeXchange said DRAM makers intend to hike contract prices between 3 percent and 5 percent for the first half of this month, but the attempt could be stymied by personal computer original equipment manufacturers.
Setting aside the DRAM sub-index, Jones Wang, a deputy manager at ABN-AMRO Asset Management Taiwan, said, "Plastics shares overtook steel and transportation shares to drive up the TAIEX."
Wang expected stock prices to continue rising next week ahead of the presidential election
