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Technology Stocks : Alliance Semiconductor -- Ignore unavailable to you. Want to Upgrade?

To: Norrin Radd who wrote (4956)	6/2/1999 3:46:00 AM
From: DJBEINO	Read Replies (1) \| Respond to of 9582

TSMC May Buy 30% of Acer Semicon, Bailing Out Rival and Boosting Capacity By Faith Hung, Chad Rademan and George Hsu Taipei, June 2 (Bloomberg) -- Taiwan Semiconductor Manufacturing Co. said it may buy a third of Acer Semiconductor Manufacturing Inc., bailing out an unprofitable rival and boosting its own capacity as demand rises. Neither company would discuss the price. The Commercial Times said TSMC will pay more than NT$8 billion ($244 million) for the stake, or about double what Acer paid a year ago to buy it from Texas Instruments Inc. For TSMC, the sale would allow it to quickly capitalize on rising demand, which helped boost its sales 16 percent in April. Acer, which now holds 49 percent of the unit, would book a profit on the transaction and take advantage of TSMC's technological expertise. ''TSMC is upgrading and increasing its own capacity, but it may not be enough'' to meet surging demand, said Jovi Chen, an analyst at China Securities Co. in Taipei. The sale is ''a good indicator of what TSMC thinks will happen to this industry for the next several months.'' TSMC Spokesman Y.C. Huang said the talks, which may not lead to the sale of exactly 30 percent, grew out of earlier negotiations about buying some production capacity from ASMI, which lost NT$5.38 billion last year and NT$4.99 billion in 1997. Acer Inc. Chairman Stan Shih said he expects the pact to be completed within two months. Acer Inc., parent of unlisted ASMI, surged by its maximum daily 7 percent limit, rising NT$3.5 to NT$53.5, the biggest one- day gain in three months and the highest since April 15. TSMC rose NT2.5 or 2.2 percent to NT$119. TSMC's own production is nearing its limits, Huang said, and its order book is full through July. A new wafer-making factory that the company is building won't be ready in time to meet strong demand, he said. DRAM Doldrums ASMI's losses were due in part to its reliance on making computer memory chips such as dynamic random access memory chips. Complex and expensive to make, the chips are sold in only a few standard types, making price their main selling point. A supply glut in the mid-1990s, reflecting increased supply from such places as South Korea, led to tumbling prices and vanishing profit margins. More recently, ASMI has moved towards a more balanced product line. ''They've been trying to work on the foundry business for a year,'' Chen said. ''Their technology level is quite good.'' TSMC, by contrast, concentrates on foundry work, producing sophisticated logic chips and processors on contract for other semiconductor and computer companies who then put their own brand name on the output. That business is booming as more companies prefer to concentrate on design and sales, leaving production to dedicated foundries like TSMC. Acer's chip design unit has also been placing orders with TSMC, Chen said. The talks about selling part of ASMI to TSMC could be linked to that arrangement, he said. ASMI also plans to sell as many as 600 million shares in a rights offer this month, the Commercial Times reported, indicating it may apply for a listing on the Taiwan Stock Exchange.