Taiwan's Powerchip to spin off contract chip arm

Taipie, May 5: The board of Powerchip Semiconductor Corp, Taiwan's top maker of DRAM memory chips, has approved a plan to spin off its contract chip manufacturing arm worth T.5 billion (5 million) into a new wholly-owned unit.

The plan, which still requires approval from the company's shareholders, would see the firm's 8-inch wafer facility in Hsinchu transferred to the new subsidiary to streamline management operations, the company said in a statement late on Friday.

The new subsidiary would issue 500 million new shares to Powerchip worth T each, the company said, adding that the independence of the contract chip arm would also help it attract more clients and partners in the future.

Powerchip, which makes dynamic random access memory (DRAM) chips used mainly in personal computers, last month said its first-quarter profit grew more than seven-fold from a year ago, beating estimates, and forecast a rebound in chip prices.

Powerchip shares rose 2.74 percent on Friday to T.60, outpacing a 1.76 percent jump on the broader market <.twii>.

Reuters>