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Macronix cuts investment, expects profitability in 2004

Macronix International Co (旺宏電子), the nation's biggest maker of memory chips for electronic games, said it expects to become profitable next year after cutting investment.

The Hsinchu-based company, which forecast a loss of NT$7.8 billion this year, reduced its spending more than three-quarters to NT$2 billion, spokesman Patrick Tang (唐致中) said.

"We hope to break even by next year," Tang said, without giving an estimated profit number. "We have cut our new projects to 30 percent of what we planned."

Product prices at Macronix, which had six straight quarterly losses, fell an average 85 percent between 2000 and last year because of competition from Intel Corp and Samsung Electronics Co, the world's biggest chipmakers.

Last year, Macronix faced investigation by authorities on charges of trading shares on the basis of information unavailable to the public.

"I don't know what the future is for Macronix," said Yeh Ke-hsian, who has lost 90 percent of the NT$10 million he invested when the company started 10 years ago.

There wasn't any wrongdoing on part of Macronix and the company hasn't received any notice of illegal activity from stock exchange authorities, chairman Hu Ding-hua (胡定華) told shareholders at the company's annual meeting yesterday. He said he doesn't know if the investigation has been completed.

Standard & Poor's on May 28 cut Macronix's debt rating one level, citing a decline in the company's operating performance and a pessimistic outlook.

The rating was cut to B from B+, both junk grade. The rating for the company's unsecured convertible bond was one level lower.

The ratings have a negative outlook, which means S&P is more likely to cut them again.

Shipments of mask read-only memory, which Macronix supplies to Japanese video-game maker Nintendo Co, declined by 45 percent in the first quarter from the previous three months, S&P said.
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