Sat, Jul 24, 2004 - Page 10 News List

Nanya Technology Q2 earnings triple to hit NT$3 billion


Nanya Technology Corp (南亞 科技), the world's No. 5 computer memory chipmaker, yesterday said quarterly earnings nearly tripled due to higher chip prices and expects seasonal back-to-school computer demand to give a further boost to the highly vola-tile industry.

The Taoyuan-based chipmaker said net profit jumped to NT$3 billion during the quarter to last month, up from NT$1 billion in the first three months. Net income accumulated to NT$4.02 billion, or NT$1.13 earnings per share.

"Higher ASP [average selling price] and increased shipments have helped pushed up the [earnings] growth," Nanya Technology vice president Pai Pei-lin (白培霖) told investors yesterday.

Prices of dynamic random access memory (DRAM) chips rose 18 percent in period from April to last month at a quarterly pace.

Better chip prices have helped pushed higher Nanya's gross margin rose to 43 percent from 31 percent in the first quarter, said the company, which supplies DRAM chips to computermakers such as Dell Inc.

"There is still room for contract prices to move higher from current level," Pai said, echoing the optimism voiced by local rival Powerchip Semiconductor Corp (力晶半導體).

Strong demand fueled by the traditional back-to-school buying spree and increasing corporate computer replacement supports the optimism, according to Pai.

The contract prices are expected to climb and hover in the range between US$4.20 and US$5 per unit in the second half, he told reporters.

Nanya sells approximately 70 percent of its total production on a contract basis.

In the supply side, Pai said, the increase will be limited, as only Inotera Memories Inc (華亞半導體), Powerchip and Samsung Electronics Co of South Korea will add more chips from their advanced 300mm fabs.

Nanya expects shipments to rise 15 percent in the third quarter from three months earlier, in the wake of a smooth transition to advanced 0.11-micron technologies and the contribution from its first cost-efficient 300mm fab, owned by Inotera.

"With the increase, we are still unable to match our customers' request for supply," Pai said.

The shipment growth will accelerate by rising 50 percent at a quarterly rate in the final quarter of the year after Inotera's 300mm fab ramps up, he added.

Inotera is ahead of its schedule of churning out 24,000 wafers per month by year end. The DRAM venture is expected to boost its output to 54,000 wafers a month by the end of next year.

Nanya's second quarter financial result has beat most analysts' expectations.

The NT$3 billion earnings are well above NT$2.4 billion forecast by Wang Bou-li (王博立), a chip industry analyst at SinoPac Securities Corp (建華證券).

With Inotera's 300mm plant joining operation, Wang said "Nanya will have an explosive growth in the second half" to catch up its rivals including Powerchip.

Powerchip posted a pre-tax income of NT$6 billion for the second quarter, which is two times that of Nanya.

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