UPDATE 1-Powerchip slashes 2009 capex, sees July sales up

* Powerchip cuts 2009 capex forecast sharply to T$5 bln

* Expects better results in July, August (Adds details, quotes)

By Roger Tung

HSINCHU, Taiwan, June 26 (Reuters) - Powerchip (5346.TWO), Taiwan's biggest DRAM chipmaker, cut capital spending to below T$5 billion ($152 million), about half of its forecast made late last year, as it is mired in the sector's worst-ever downturn.

In October last year, Powerchip, which together with other DRAM makers including ProMOS (5387.TWO) and Nanya Tech (2408.TW) has suffered from several quarters of losses, said it saw 2009 capex at T$10 billion.

"We already have a 65-nanometre production facility that is good enough, so we won't need the extra capex," Powerchip spokesman Eric Tang told Reuters on the sidelines of the company's annual shareholders' meeting.

Powerchip officials said its 65-nanometre facility was more efficient than technology used by domestic rivals and there was little necessity for further upgrades.

The revised figure would be about a quarter of its 2007 capital expenditure of around T$20 billion.

Tang also said he expected the company's results to improve in July and August as a component shortage that has been affecting notebook PC production should be resolved.

"We should see utilisation rates improving a little then," Tang said,without elaborating.

This would be in line with forecasts given by contract notebook PC manufacturers such as Quanta (2382.TW), which has forecast that computer demand would pick up from September onwards. [ID:nTP101788]

To combat the current supply glut, most DRAM chipmakers have agreed to coordinate a series of production cuts. Powerchip previously said it expected prices to climb from the third quarter of this year as a result.

Taiwan's government has also stepped in, setting up Taiwan Memory Co (TMC) to help consolidate the sector and get local players in touch with foreign rivals such as Elpida (6665.T) and Micron (MU.N).

Members of Taiwan's troubled DRAM sector have experienced funding difficulties, with Powerchip reseting the terms of convertible bonds totalling $158 million because of repayment problems.

At 0228 GMT, Powerchip shares were down 1.94 percent, underperforming a 0.6 percent advance on the benchmark TAIEX share index. (US$1=T$32.9) (Writing by Kelvin Soh; Editing by Lee Chyen Yee and Chris Lewis)