Taiwan DRAM shares fall after poor Q2 results

TAIPEI, July 24 (Reuters) - Shares of Powerchip (5346.TWO) and Nanya Technology (2408.TW), Taiwan's two largest DRAM chip makers, fell on Thursday after posting wider-than-expected losses for the second quarter due to falling chip prices. About one hour into trade, Powerchip shares fell 0.8 percent, hovering at a five-year low and Nanya Tech shares lost 0.4 percent.

They lagged the broader electronics sub-index's .TELI 1.3 percent rise and the main TAIEX's .TWII 0.5 percent gain. "This DRAM downturn is the worst for Taiwan on record-high leverage in a demand-led global economic slowdown," Morgan Stanley analyst Frank Wang wrote in a research report on Wednesday.

Wang put an "underweight" rating on both Powerchip and Nanya Technology, which reported their fifth straight quarterly losses on Wednesday. (Click [ID:nTP295201] for details)

Merrill Lynch also reiterated its "underperform" rating on Powerchip on Thursday, citing that the firm's cost reduction from its new process technologies missed estimates. (US$1=T$30.4) (Reporting by Baker Li, Editing by Ken Wills)