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January 22, 2007 11:55 pm

Powerchip in T$69bn plan to boost capacity

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Powerchip, Taiwan’s largest memory chipmaker, plans to invest T$69bn (US$2.1bn) in new capacity this year as the company looks to continued growth in the sector.

The announcement came as the chipmaker reported a 97 per cent quarter-on-quarter jump in net earnings to T$15.33bn for the three months to December 31 2006. Full-year net profit rose 325 per cent to T$27.33bn.

Frank Huang, Powerchip chairman, said shipment growth would slow from last year’s record 85 per cent, but would still be 70 per cent this year.

He rejected some analysts’ warnings of a crash in memory chip prices, which have recently started sliding.

“We will see a 20 to 25 per cent price drop this year, and that is a healthy development,” Mr Huang said. “We are still very optimistic about this year’s growth.”

Mr Huang predicted that demand for dynamic random access (D-Ram) chips would push up spot market prices again in the second half of this year, driven by the increased memory content required by Vista, Microsoft’s new operating system.

Powerchip said T$20bn of its almost T$70bn in capital expenditure this year would flow into a fabrication plant owned by Rexchip, a new joint venture with Japan’s Elpida.

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