Taiwan stocks reversed course to inch up 0.13 percent on Wednesday, the last trading day before the Lunar New Year holidays, with DRAM makers rallying amid growing investor expectations for a long-awaited industry restructuring. The main TAIEX share index ended 5.36 points higher at 4,247.97, as analysts said government funds bought some heavyweights such as TSMC and UMC before the market closed for an extended Lunar New Year break through February 1.
The index had closed at a 1-1/2-month low on Tuesday. Taiwan Semiconductor Manufacturing Co (TSMC), the world's top contract chip maker, and smaller rival United Microelectronics Corp (UMC) gained 1.52 percent and 2.82 percent, respectively. Shares of DRAM makers jumped as talks to consolidate Taiwatic and foreign players meeting government officials in a bid to reach deals as the Lunar New Year approaches.
Executives from Japan's Elpida and US firm Micron, technology partners for Powerchip and Nanya respectively, were planning trips or had come recently for talks as the industry grapples with its worst ever downturn. "Despite all the news we're hearing, it's still very unclear who could lead a merger or which companies will merge," said Andrew Deng, a vice president of Taiwan International Securities.
"There are still high risks for DRAM companies in terms of the length of the downturn and financial control," he said, adding that he recommended his clients sell DRAM stocks for now. Shares of top DRAM maker Powerchip and smaller rival ProMOS both jumped by the 7 percent daily limit, pushing up the semiconductor sub-index 0.6 percent. Number two maker Nanya Technology ended flat after on Tuesday posting its seventh straight quarterly loss of T$10.4 billion ($310 million) in the fourth quarter.
Deng said trading volume was thin as recent slides in global markets triggered market concerns over the health of the world economy. Turnover was at T$49 billion, slightly higher than T$45.7 billion in the previous session. Shares of LCD maker Chi Mei fell 0.49 percent after a newspaper reported on Wednesday the firm would put off setting up an 8.5-generation LCD plant as it waits for the industry outlook to become clearer.
Chi Mei's larger rival AU Optronics, the world's No 3 flat panel maker, fell 2.12 percent. The LCD share declines came as investors ignored reports by data tracking firms DisplaySearch and WitsView saying LCD prices were expected to start rising soon, after stabilising at the end of January, another newspaper said.
The transportation sub-index gained 1.52 percent, buoyed after a government official on Tuesday said China and Taiwan would change regular chartered flights into scheduled flights this year, a move that could lift Taiwan's ailing airline industry.