Thu, Jul 22, 2004 - Page 10 News List

Powerchip reports 80% rise in Q2 profits to NT$6 bn


Powerchip Semiconductor Corp (力晶半導體), the nation's No. 2 computer memory chipmaker, yesterday posted solid second-quarter profits, helped by improved gross margin.

In the three months ending last month, Powerchip said profits jumped about 80 percent to NT$6 billion from NT$3.36 billion in the first quarter. In the first half of the year, the chipmaker accumulated a total of NT$9.36 billion in earnings, or NT$2.43 a share.

"Our gross margin has climbed to a high level, close to that of Taiwan Semiconductor Manufacturing Co (台積電)," said chairman Frank Huang (黃崇仁).

Gross margin jumped to 47 percent during the second quarter from 35 percent in the first quarter due to a similar rise in chip prices, he said.

Shares of Powerchip advanced 4.1 percent to close at NT$25.4 on the Gretai Securities Market, the nation's over-the-counter market.

Looking ahead, Huang expects the unit price to fall moderately to a profitable range between US$4.2 and US$5 in the third quarter, down from their peak in mid-April, when chip prices skyrocketed to US$6.

In line with Huang's comments on chip prices, DRAMeXchang forecast that memory chip prices are expected to rise during the third quarter, fueled by inventory buildup by computer vendors for the back-to-school buying season.

In the past week, DDR256Mb chips bounced back slightly from the previous week, up 0.42 percent to US$4.72 per unit, according to DRAMeXchange.

Fu Hsu-cheng (傅旭正), an assistant manager at Ta Chong Investment Trust Corp (大眾投信), however, said he is more conservative about the dynamic random access memory (DRAM) sector, which is vulnerable to price fluctuation.

"The chance [of a supply constraint] will be very slim," Fu said. "We're now pinning hope on a revival of the computer sector in the final quarter, though some signs already show the rebound will not be as strong as expected."

In addition to improving chip prices in the second quarter, greater contribution of a cost effective 300mm fab also helped push up gross margins, Powerchip said.

With the operation of its first cost-saving 300mm fab beginning last summer, Powerchip has sharply trimmed its costs to around US$2.5 per chip.

"We expect the cost-efficiency to amplify in the following quarters along with 17-percent increase in wafer output each quarter," said Powership president Brian Shieh (謝再居).

Powerchip's revenue will grow at a similar pace, he added.

"We're optimistic about the second half. We expect chip supply to remain tight in the coming quarters," he said.

Larger rival Nanya Technology Corp (南亞科技), which was about a year and half behind Powerchip in opening an advanced 300mm plant, is expected to earn about NT$2.5 billion in the second quarter, according to a forecast by Liu Szu-liang (劉思良), a DRAM analyst with Yuanta Core Pacific Capital Management (元大京華投顧).

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