Powerchip gets $125 mln loan from Taiwan firms

TAIPEI, July 9 (Reuters) - Powerchip (5346.TWO), Taiwan's top DRAM chip maker, is getting a $125 million loan from two firms, one of the lenders said on Thursday, as it struggles to cope with the sector's worst-ever downturn.

Taiwan chip packaging firm Powertech (6239.TW) said in a statement it would provide $17 million of the loan while the rest would be provided by Kingston Technology, a U.S. DRAM module supplier and one of Powertech's largest shareholders.

In return, Powerchip will use shares from its Rexchip subsidiary as a guarantee for the loan from Powertech.

Powertech did not say how Kingston will be raising the money, or what Powerchip will use as a guarantee to get the loan from the unlisted U.S. firm.

"The DRAM (dynamic random access memory chips) sector is currently facing the threat of oversupply," Powerchip wrote in a filing to the Taiwan Stock Exchange.

"The global financial crisis has led to a fall in demand for DRAM chips, drastic price falls, leading to liquidity problems at Taiwanese DRAM factories."

The DRAM sector is currently grappling with its worst-ever downturn as oversupply and falling demand as a result of the economic downturn hits chipmakers such as Powerchip and smaller rivals such as Nanya Tech (2408.TW) and ProMOS (5387.TWO).

In June Powerchip said it planned to slash its capital expenditure and dispose of certain assets in response to the crisis and that it remained under continued financial pressure. [ID:nTP312139]

At 1211 GMT Powerchip shares were trading down 6.6 percent underperforming a 1.2 percent gain on the benchmark TAIEX share index.

For a Factbox on DRAM chips prices and demand click [ID:nT240726] (Reporting by Kelvin Soh; Editing by Mike Nesbit)