PSC to Cut Capital By 38%, ProMOS Said to Follow Suit

Taipei, April 20, 2010 (CENS)--PowerChip Semiconductor Corp. (PSC) recently announced it would cut capital by 38%, or US$1.07 billion, as part of its plan to cope with the huge loss exceeding half of its capital last year.

PSC's capital slashing came after a similar move taken by Nanya Technology Corp. and is said to incur ProMOS Technology Corp. to do likewise. In the second quarter last year, Nanya announced cut US$974 million.

Industry watchers estimate the total cut by the Taiwan's top three dynamic random access memory (DRAM) chipmakers at over US$3 billion, the most extensive financial restructuring ever launched by the island's DRAM industry.

Industry executives expect financial restructuring to help boost competitiveness of Taiwan's DRAM chipmakers in face of heavyweight rivals like Samsung of South Korea.

PSC executives estimated the significant capital cut to push up book value of the company's stocks to NT$6.9 per share from NT$3.31, pulling the company out of category of full-cash delivery stock.

PSC plans to start two private-equity placements and a global depository receipt (GDR) issue after the capital cut. Some institutional investors expect DRAM-module makers and retailers to be perspective subscribers to the company's new stocks on ground that they need to secure steady supply sources of DRAM chips.

ProMOS's board of directors will hold a meeting late this month to discuss capital-cut plan. Industry watchers expect the cut rate at 40-50%, or US$906 million. After the reduction, book value of the company's stocks is projected to rise above NT$5 per share, up from NT$3.7 registered until the third quarter last year.

Capital Cuts Projected By Taiwan's Top-Three DRAM Chipmakers

Company	Announcement Time	Cut Description	Change of Stock Book Value	Actions After Cuts
Nanya	Q2 2009	Cut NT$31.1B, or 66.43% of Total Capital	Rise Above NT$10 Per Share from Below NT$5	Raise tens of billions of NT dollar
PSC	Q2 2010	Cut NT$34.3 B, or 38% of Total Capital	Rise to NT$6.9 Per Share from NT$3.31 Registered In Late 2009	To issue GDRs and launch private-equity placements
ProMOS	N/A	Cut An Estimated NT$36B, or 50% of Total Capital	Estimated to rise above NT$5 from NT$3	N/A

Sources: The companies, institutional investors and insiders