Nanya Technology, the world's No. 5 supplier of computer memory chips announced it is considering building a new FAB in Taiwan.

"Nanya Technology has a long-term goal to expand capacity as the increase will be crucial for us to remain competitive," Nanya Technology spokesman Pai Pei-lin said yesterday.

"We won't rule out the possibility of building one on our own. But it will not happen in the near term," Pai said.

The Taoyuan-based dynamic random access memory (DRAM) chipmaker said it was assessing whether to build an advanced 12-inch wafer fab alone or to extend its partnership with Infineon Technologies AG of Germany.

Pai said his company had not made a final decision but had scouted several sites around the nation.

Nanya Technology is pinning its hopes on Inotera Memories Inc, a 50-50 joint venture with Infineon, to further boost wafer output and cost savings.

Inotera is expected to produce 24,000 wafers a month by the end of the year, less than half the 54,000 target for when full-scale production begins next year.

As the assessment is still in the early stage, Wu Chia-chau , spokesman of Nan Ya Plastics Corp, denied its DRAM affiliate would pour US$8 billion into the new factory, as a Chinese-language newspapers reported earlier.

Nan Ya Plastics holds a controlling stake in Nanya Technology.

"I believe Infineon will by no means pull out of the joint venture, as it needs Nanya Technology to share the heavy capital spending and to leverage risk," said George Wu , an analyst with Primasia Securities Co.

Aside from safeguarding Nanya Technology's strong market position, Wu said he did not see the urgency for the Taiwanese chipmaker to build a new 12-inch wafer fab, but the investment could pave the way for demand in the next upturn.

Nanya Technology's smaller rivals Powerchip Semiconductor Corp  and ProMOS Technologies Inc have started construction of their second 12-inch wafer factories this year and are expected to start mass production in 2006.

Foreign brokerage CLSA Ltd has a "buy" recommendation on Nanya Technology and "out-perform" for Powerchip.

"It's unavoidable for Nanya Technology to increase capacity to seek growth. But what concerns me is if the market will be able to absorb the additional output," said Liu Szu-liang , who tracks DRAM sector for Yuanta Core Pacific Capital Management).

Nanya Technology yesterday said revenues jumped 10 percent last month to NT$3.51 billion from NT$3.18 billion in March on a 16-percent surge in average selling prices.

The growth pace, however, will slow a bit this month because of tumbling spot prices for memory chips, Pai said.