ProMOS to raise 2007 capex as Vista boosts DRAM

Taiwan's ProMOS may raise its capital spending plans for 2007 to meet brisk demand for DRAM caused by the launch of Vista

ProMOS Technologies may raise its capital spending plans for 2007 to meet brisk demand for DRAM (dynamic RAM) chips caused by the launch of Microsoft's new Windows Vista OS.

The Taiwanese company's capital spending may be raised to speed the ramp up of a new 12-inch factory and hurry the construction of another such factory, said Ben Tseng, a vice president at ProMOS, in a phone interview on Thursday.

A company plan to build two additional state-of-the-art 12-inch chip factories over the next three years, at an estimated cost of US$7 billion will have no impact on current spending plans, he said.

"Even if we break ground later this year, that's not going to change the capex number," he said, because the cost would be minimal compared to the US$1.25 billion in spending the company forecast for this year. He declined to say exactly how much ProMOS might increase its spending this year because his company is in a quiet period mandated by stock market regulators to keep companies from divulging information ahead of a quarterly financial announcement or stock or bond issuance.

Taiwanese DRAM makers are planning to spend billions of dollars on new factories and equipment this year mainly due to Vista.

The new OS has helped DRAM companies with stricter system memory requirements for PCs and by increasing demand ahead of the launch.

Microsoft stipulates that computer makers install 512M bytes of DRAM for a PC to be considered 'Vista Capable,' which is good enough to run Windows Vista Home Basic. For Windows Vista Home Premium, Windows Vista Business, Windows Vista Enterprise, and Windows Vista Ultimate, Microsoft set the basic system requirement at 1G byte of DRAM.

It's a big difference compared to PCs running Windows XP, which requires only 125M bytes of DRAM.

DRAM prices surged last year as PC makers started making Vista-capable PCs and stockpiled excess chips ahead of the launch of the new OS. The price of the most widely used DRAM chips, 512M bit, 667MHz DDR2 (double data rate, second generation), leaped 61 percent last year to US$6.36, according to DRAMeXchange Technology, which runs an online DRAM market.

ProMOS's rivals in Taiwan have announced major spending plans on new factories this year. Powerchip Semiconductor, the largest DRAM maker in Taiwan by revenue, plans to spend US$2.1 billion, while the third largest player, Nanya Technology, intends to spend US$2.4 billion.

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