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Shares of Macronix jump on Nintendo's Wii U launch hope

2012/09/20 12:09:37

Taipei, Sept. 20 (CNA) Shares of Macronix International Co., one of Taiwan's memory chip suppliers, soared Thursday morning as investors had high hopes that the launch of Japan-based Nintendo Co.'s new gaming console, the Wii U, will help the chip maker improve its bottom line, dealers said.

As of 11:25 a.m. shares of Macronix had added 7 percent, the maximum permitted daily increase, to NT$9.83 (US$0.34), with 84.23 million shares changing hands. The benchmark weighted index was down 0.69 percent at 7,728.46 points.

"Foreign institutional investors have resumed buying in Macronix shares on high expectations of the debut of the Wii U, as the Taiwanese firm generates about 60 percent of its sales from its business with Nintendo," Horizon Securities analyst Benson Huang said.

A day earlier, foreign institutional investors served as net buyers of 3.70 million Macronix shares, according to the Taiwan Stock Exchange.

Nintendo announced that its latest version of its gaming console will go on sale in the U.S. Nov 18, to take the advantage of the buying spree of the Christmas holiday season. It will go on sale in Japan Dec. 8.

The Wii U console is equipped with a GamePad touch screen controller designed to compete with gaming apps on smartphones and tablet computers, Huang said.

Huang said Nintendo has set prices for the new devices starting from US$300 for the U.S. market and between 26,250-31,500 Japanese yen for the Japanese market, adding that the pricing is expected to be affordable to many consumers.

"Nintendo has lost a lot of business due to the popularity of smartphones and tablet computers. The touch panel design is aimed at regaining a footing in the gaming industry," Huang said.

"As a result, investors are paying a lot of attention to the firms in the Nintendo supply chain, like Macronix, and were rushing to pick up the stock this morning," Huang said.

In the first half of this year, Macronix incurred NT$0.71 in net loss per share, compared with NT$0.45 in earnings per share over the same period of last year, due largely to falling shipments to Nintendo.

"The market is expecting the launch of the Wii U to boost Macronix's production capacity utilization rate and eventually boost its profitability for the second half of this year on increasing shipments," Huang said, adding that Macronix shipments have started to recover from August.

Huang said it is possible that Macronix will witness its production utilization rate return to 90 percent in the third quarter from 84 percent recorded in the second quarter.

However, Huang said, Macronix shares may encounter stiff technical resistance as the stock moves closer to the NT$10 mark after recent strong buying from institutional investors.

(By Frances Huang)