The Wall Street Journal-20080123-Chip Makers Post Losses As Prices Fall
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Chip Makers Post Losses As Prices Fall
TAIPEI -- Taiwanese memory-chip makers Nanya Technology Corp. and Inotera Memories Inc. posted record quarterly losses for the three months ended December on a fall in chip prices.
The two said they also expect losses in the current quarter, noting that the slight rebound in prices of dynamic random access memory chips isn't enough to break even.
But officials at both companies said demand should strengthen in the second half, helping earnings.
Nanya, Taiwan's second-largest memory-chip maker by revenue after Powerchip Semiconductor Corp., posted a fourth-quarter net loss of 8.17 billion New Taiwan dollars (US$252.9 million), marking a reversal from a year-earlier net profit of NT$6.46 billion. Revenue fell 54% to NT$10.37 billion from NT$22.33 billion.
"The continued fall of chip prices is the main factor behind the losses in the fourth quarter," Nanya spokesman Pai Pei-lin said. "But I'm positive about the industry in the second half of the year, when chip prices will likely rebound as demand picks up."
Inotera, a joint venture between Nanya and Germany's Qimonda AG, posted its first quarterly net loss, saying it was NT$3.66 billion in the red, marking a reversal from a year-earlier net profit of NT$4.89 billion. Revenue fell 14% to NT$10.06 billion.
"The market situation is worse than we expected," Inotera President Charles Kau said.
Henry Yen, an analyst at Masterlink Securities, said it may take the industry longer to recover amid growing concerns over a U.S. slowdown.
"Nanya and other DRAM makers may not return to profitability in the third quarter, as previously expected, if the U.S. falls into a recession, which could significantly cut consumer spending," Mr. Yen said.
Nanya's Mr. Pai said the company had a negative gross margin of 29% in the fourth quarter, compared with 2% gross margin in the third quarter, on a 33% fall in its average selling price.
For the year, Nanya posted a net loss of NT$9.37 billion.
