Wed, Jul 21, 2004 - Page 10 News List

Chip-supply crunch helps ProMOS boost Q2 profits

By Lisa Wang  /  STAFF REPORTER

ProMOS Technologies Inc (茂德 科技), the nation's third-largest computer-memory chipmaker, said yesterday that second-quarter profits more than doubled as chip prices shot up on a supply crunch at the beginning of the quarter.

In period from April through last month, ProMOS's earnings jumped to NT$3.8 billion on revenues of NT$12 billion. The Hsinchu-based company earned NT$1.2 billion in the first three months of the year.

That brought its first-half earnings to NT$5 billion, which is well ahead of its schedule to meet the full-year earnings of NT$8.6 billion projected by the chipmaker.

Better dynamic random access memory (DRAM) chip prices pushed up ProMOS' gross margin to 43.4 percent in the last quarter, up from 29 percent in the first quarter, ProMOS spokesman Albert Lin (林育中) told investors.

ProMOS shares fell 6.4 percent to NT$16.1 on Taiwan's over-the-counter-market, the Gretai Securities Market.

DRAM prices have weakened since hovering at a level around US$5 in April and May, according to the statistics provided by online price fixer DRAMeXchange.

"The strong growth, rarely seen during the chip industry's slack second quarter, will carry into the third quarter," Lin said.

"Though computer vendors are not as hungry as they were in April, we believe the back-to-school purchase spree will whet the appetite for memory chips and push chip prices higher," Lin said.

In the week ended July 13, prices of popular 256Mb DRAM chips dropped roughly 3.47 percent to US$4.73 per unit on the spot market, according DRAMeXchange.

"We believe the price rebound along with further cost savings will give ProMOS a good position to see mild earnings growth in the current quarter," Lin said.

Prices on the spot market are likely to be capped at US$5 apiece in the second half of the year, compared to the average US$4.5 in the first six months, Lin predicted.

Research house iSupply Corp, however, said in its latest report that it "does not detect any fundamental changes that would alter our current negative DRAM market outlook."

"The present DRAM prices are too high to stimulate more de-mand," it said.

DRAM revenue in the third quar-ter will decrease by 3 percent on a quarterly basis before returning to positive double-digit percentage growth in the fourth quarter, iSupply said.

Lin said the cyclical demand will help ProMOS sustain its revenue in the current quarter.

Oscar Yang (楊啟宏), a fund manager at SinoPac Securities Corp (建華證券), said ProMOS's second-quarter earnings are in line with his expectations.

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