Nanya Technologies Corp (南亞 科技), the country's No. 1 maker of computer-memory chips, said yesterday that first-quarter earnings surged 60 percent from the previous quarter, owing to a pickup in gross margin and lingering supply constraint.
For the first three months this year, the Taoyuan-based chipmaker posted better-than-expected earnings of NT$1 billion, or NT$0.28 a share, from NT$622 million in the previous quarter. The company reported a NT$927 million loss during the same period of last year.
Revenues amounted to NT$8.54 billion in the first quarter, only 2 percent higher than NT$8.31 billion in the fourth quarter of last year, according to the dynamic random-access memory (DRAM) supplier. It reported a NT$5.83 billion in revenues a year ago.
"A significant improvement in the gross margin is the main factor [for the profit increase], which is
a result of our aggressive cost-
reduction efforts, rather than recent strong chip prices," vice president Pai Pei-lin (
As the cost-effective plant will only start to produce wafers by the end of the year as scheduled, the DRAM maker has tried to cut costs by trimming wafer-testing costs by 75 percent, Pai said.
Nanya's cost-efficiency manufacturing has paid off well.
During the same period, DRAM prices inched up 1 percent quarter on quarter after spot prices shored up beginning early this month, according to statistics provided by the DRAMeXchange. In comparison, Nanya's gross margin climbed to 31 percent during the same period from 23 percent in the fourth quarter, Pai said.
"The spikes [in both profits and margins] have beat most analysts' expectations," said Wang Bou-li (王博立), a chip industry analyst at Polaris Securities Co (
Nanya's gross margin is not far from the 35 percent achieved by its rival Powerchip Semiconductor Corp (力晶半導體) in the first quarter.
"I believe most industry watchers will be busy raising Nanya's full- year profit forecast," Wang said.
The DRAM maker is likely to make NT$3 per share in profits at least this year as the demand will remain strong enough to sustain DRAM prices, compared to the previous estimate of NT$1.7, he said.
Giving his guidance about DRAM price trends, Pai appeared to be optimistic, given that slower-than-expected technological transitions will continue to curb supply growth and make it unlikely to catch up with the rising demand from corporate computer replacement.
"The current prices seem to be OK since we haven't seen a large number of our PC OEM [original equipment manufacturing] customers shifting to low-density memory chips," Pai said.
Prices of standard 256-megabit 400-megahertz double-data-rate (DDR) DRAM chips dropped 3.81 percent to US$5.7 per unit on the spot market yesterday.
Unlike Powerchip, Nanya, which sells a bulky 70 percent of its chips to contracted personal computer vendors including Dell Inc, did not benefit from a more than 70-percent surge in spot prices since early this year, as online price fixer DRAMeXchange tallied.
Powerchip, which sells most of its chips to the spot market, earned NT$0.95 a share in the first quarter.
"We hope to shrink the price gap between contract prices and spot prices," Pai said.
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