Chips go soggy after Hynix failure

CHIP stocks went soggy around Asia as investors fled the sector after the collapse of a rescue bid by Micron Technology of the US for struggling South Korean memory maker Hynix Semiconductor.

With Japan's markets closed until Tuesday for public holidays, investor attention was focused on electronics sectors in South Korea and Taiwan, which continued to lose their glamour.

Korean stocks lost almost 1.5% as the Kospi dipped 12.46 points to 847.4, while Taiwan's Weighted Average slipped closer to its break-even point for the year so far with a fall of 36.83 points to 5831.

Hong Kong's spring surge showed signs of fading as shares in China's mobile phone operators swooned after the mainland government slapped new charges on users of their services, although renewed demand for property stocks left the Hang Seng index up 72.87 at 11,852.98. The regional switch out of computer-related stocks continued to benefit Hong Kong's market as its relatively poor performance up until this week had left it looking undervalued.

Institutional investors came back in for heavyweight property, while the financial sector was also strong. HSBC Holdings was up 25 cents to HK$94 on hopes of a general economic recovery. The market was limited by weaker trading in China Mobile and China Unicom.

In Seoul, growing disquiet about the outlook for semiconductor prices, following the surprise rejection of Micron's deal by Hynix directors earlier this week, raised fears that the region-wide rally in the stocks had taken prices too far ahead of reality.

Warnings from Dell Computer and Micron that the sales outlook was dimming combined with a poor overnight showing on Nasdaq, which fell to its lowest since October, added to the gloom. But the fear is that in its bid for independence Hynix will dump chips on the market to finance its huge debt repayments.

Hynix shares firmed on the news that Micron had washed its hands of any deal, as local investors bet that the company could save itself with the help of new deals from creditors.

At one point the stock was up 8% on the day, but other Korean chips stocks fell, led by a 3% drop in Samsung Electronics after the Philadelphia Semiconductor index lost almost 5% overnight.

Biggest faller in Taiwan's chip sector was Nanya Technology, which tumbled almost 7% despite yesterday's joint venture deal with Infineon of Germany.

Singapore's market was rescued from technology-driven falls by company-friendly tax moves that boosted blue-chips, and the Straits Times index added 20.31 points to 1760.66.

The price of Australian telephone operator Telstra was also batted about after downgrading of earnings forecasts, although an early 2.5% fall was later halved. A better-than-expected 0.8% jump in retail sales in March underlined the strength of the economy, but also pointed towards higher interest rates, so the impact on the All Ordinaries index was subdued, and it put on 3.2 points at 3314.5.

Mild profit-taking took Malaysia's Kuala Lumpur index down 1.89 points to 793.46. Thailand's SET edged up 0.91 to 370.77, and in Indonesia the Jakarta Composite added 1.24 points at 540.94.

Prices and indices in this section are supplied from various sources and calculated at different times and may not always match those listed in the tables.