Print

Mail

wiki links

Powerchip expects to cash in on strong DRAM prices

Powerchip Semiconductor Corp (力晶半導體), the nation's third largest maker of dynamic random access memory (DRAM), expects second-quarter sales to grow 30 percent to 50 percent from the previous quarter, benefiting from strong chip prices, a company executive told investors yesterday.

"Powerchip will see sales continue to grow quarter on quarter after a stellar April-June period," Powerchip chairman Frank Huang (黃崇仁) said.

The growth will be a result of higher prices for standard memory chips for computers, which started to shoot up late last month amid a supply constraint, Huang said, adding that supply is unlikely to catch up to demand this year.

Powerchip president Brian Shieh (謝再居) said "2004 will be a harvest year for Powerchip."

The company will benefit from having taken the bold step of investing in its first 300mm factory during the cyclical downturn in 2001, he added.

Prices for 256MB, 400MHz DRAM chips have jumped 22 percent to US$6.52 from US$5.29 per unit in the past week, and may rise to US$6.52 or US$7.05 in the next seven trading sessions, according to online price fixer DRAMeXchange.

First-quarter earnings

For the first three months, Power-chip earned NT$3.59 billion, or NT$0.95 per share, outstripping last year's earnings of NT$0.06 a share. First-quarter revenues hit a record high of NT$10.54 billion.

"The financial results are slightly higher than my projection," said Wang Bou-li (王博立), a memory-chip analyst with Polaris Securities Co (寶來證券). Wang predicted Powerchip would see NT$0.85 earnings per share.

For this quarter, Huang said, chip prices may hover at a healthy level between US$5 and US$6 as supply growth will continue to be constrained by the slow transition to advanced 0.11-micron processing technologies.

There is scant room for chip prices to go up given that personal-computer original equipment manufacturers will be under heavy pressure when the chip prices hit around US$6 and US$7, he added.

But Wang said Powerchip will outperform rivals ProMOS Technologies Inc (茂德科技) and Nanya Technologies Corp (南亞科技) due to its higher chip output and greater presence in the spot market, which offers higher prices, Wang said.

Profitable

JP Morgan said in a report on Tuesday that it also expected Powerchip to be the most profitable domestic DRAM company this year, citing its high output and competitive cost. It forecast Powerchip would see earnings per share of NT$1.12 this quarter before falling slightly to around NT$0.71 and NT$0.49 in the third and fourth quarters.

But JP Morgan retained its neutral rating for the company as DRAM spot prices are unlikely to stretch beyond current levels.

Due to profit-taking, Powerchip shares fell 1.4 percent to NT$35.1 on the Gretai Securities Market (櫃台買賣中心), the nation's over-the-counter market. Shares in the company have risen roughly 108 percent since January.

ProMOS Technologies Inc (茂德科技) fell 0.4 percent to NT$22.60 while Nanya Technology Corp (南亞科技) was off 2.3 percent at NT$29.40 on the TAIEX.
This story has been viewed 2246 times.