Powerchip Semiconductor Corp (力晶半導體), Taiwan's top manufacturer of memory chips for computers, yesterday said quarterly earnings increased more than five-fold year-on-year as growing demand pushed chip prices higher.
Third quarter earnings climbed to a record high of NT$6.98 billion, or NT$1.79 per share, jumping from NT$1.28 billion, or NT$0.52 earnings per share, a year ago. Revenues also rose to NT$16.1 billion in the three-month period to September.
The result represented 30 percent quarterly growth in earnings, from NT$5.36 billion, or NT$1.48 per share, in the second quarter.
"If the prosperity persists [for another quarter], Powerchip will be in a good position to exceed earnings per share of NT$6 for this year," Chairman Frank Huang (
The Hsinchu-based chipmaker forecasts it will earn NT$5.3 a share for this year, or NT$55.05 billion in net income on revenue of NT$20.47 billion.
Overcapacity
Despite a projected 15 percent overcapacity expected in the first quarter of next year as an analyst with investment Citi Bank said in the latest report, Huang said he does not expect a glut to occur as capacity expansion will still be below the increase in demand.
"The DRAM [dynamic random access memory] sector is not as bad as some thought. We expect supply and demand to approach parity next year," Huang said.
Powerchip, for example, will use 70 percent of new capacity from its advanced 12-inch fab for computer memory chips, he explained. Next year, Powerchip will boost the plant's capacity to 74,000 units per month from the current 40,000.
Price prediction
Prices for computer memory chips will drop by a manageable pace of 10 percent to 15 percent annually, Huang predicted.
Paul Tsai (
"The fourth quarter looks okay. Chip prices are expected to remain steady. But visibility remains vague for 2005," Tsai said.
The mainstream DDR256Mb memory chip was unchanged at an average of US$4.69 a piece yesterday on the spot market, according to DRAMeXchange.
The researcher expects DRAM prices to have some room for upside this week due to strong demand from computer vendors like Dell Inc.
Taking the 256Mb modules as an example, DRAMeXchange expects the contract price to increase 1.5-2.5 percent for the second half of this month.
Looking from a longer view, Tsai said DRAM demand will not be as strong as Powerchip expects given that computer replacement could slow due to lack of new technologies next year.
"This year could be the strongest year for the memory chip sector," Tsai said.
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