The Wall Street Journal-20080130-Asian Chip Makers Post Losses
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Asian Chip Makers Post Losses
Full Text (450 words)Two memory-chip makers in Asia reported hefty quarterly net losses, citing a steep fall in chip prices amid a supply glut.
Elpida Memory Inc., Japan's only exclusive maker of dynamic random access memory chips, posted a net loss of 12.1 billion yen ($113.2 million) for its fiscal third quarter, ended Dec. 31, compared with a profit of 24.9 billion yen a year earlier.
Sales tumbled 34% to 94 billion yen from 142.6 billion yen. Elpida also posted an operating loss of 8.9 billion yen, its first such loss in nine quarters, compared with profit of 27.3 billion yen a year earlier.
The results reflect the toll that the decline in DRAM prices has taken on Elpida, which up until the just-ended quarter was able to post operating profits on a quarterly basis.
A spokeswoman said the company managed to minimize the impact from the fall in DRAM prices, thanks to strength in its premium memory segment. As a result, she said the company managed to limit the average price decline in overall DRAM product prices to 18% from the prior quarter, compared with the approximately 40% fall in benchmark DRAM chip average prices.
Elpida turns out a high ratio of premium memory, which is used in mobile phones and digital gadgets. Prices of DRAM chips widely used in personal computers have plunged amid oversupply, triggered by expectations for strong demand before the launch of Microsoft Corp.'s Windows Vista operating system in January 2007.
Taiwan's ProMOS Technologies Inc. also posted a loss for the period triggered by slumping chip prices and the supply glut.
ProMOS said it had a record quarterly net loss of 4.91 billion Taiwanese dollars (US$151.8 million) for the fourth quarter, reversing a net profit of NT$8.07 billion a year earlier.
It was ProMOS's third straight quarterly net loss and was also wider than a net loss of NT$2.92 billion in the third quarter of 2007.
Company executives and analysts expect most producers of DRAM chips to post another quarterly loss for the current quarter, before they turn profitable during the second half. Many expect market conditions to improve then when excess inventories are digested from rising PC demand ahead the back-to-school shopping season.
ProMOS Chairman Chen Min-Liang said the company expects to post a fourth quarterly net loss in a row for the period ended March 31 because of weak DRAM prices.
The Elpida spokeswoman said despite expectations for another tough quarter through March, "we can expect a full recovery [in DRAM prices] in the April-to-June quarter" owing to decreasing inventories and after recent moves by chip makers to hold back on investing in new plants and equipment.
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Perris Lee Choon Siong contributed to this article.
