Thu, Feb 17, 2005 - Page 10 News List

ProMOS Technologies predicts lower profit


ProMOS Technologies Inc (茂德科技), Taiwan's second-largest supplier of memory chips for computers, yesterday said first-quarter profits would drop slightly from last quarter on lower chip prices and reduced output.

"The profit decline will be mild, as contract prices are stabilizing due to a tight chip supply," spokesman Albert Lin (林育中) said.

ProMOS expected contract prices to remain flat in the second half of this month from the first half, which would be a good thing as chip prices usually plunged in the slow month," Lin said.

First-quarter sales will also decline from the previous three-month period as an equipment maintenance period last month and less working days this month would bring down output, chairman Chen Min-liang (陳民良) said.

ProMOS said earlier that four-quarter earnings climbed to NT$1.9 billion versus NT$942.7 million a year ago, subtracting from the company's cumulative first nine months from full-year results released yesterday.

The chipmaker earned NT$10.1 billion last year on revenue of NT$42.9 billion.

But, "overall, 2005 will be a relatively stable year tracking the history of the DRAM (dynamic-random-access-memory) industry, though it's not as good as 2004," Chen told an investors' conference.

Chen's comments are based on anticipated "reasonable" price fall.

Chip prices will only decline by less than 30 percent this year, which would be good enough for memory chipmakers to make profits, as costs continue to fall after moving to more advanced technologies, Chen said.

“The price decline is in line with our expectations. We believe the second quarter will be the worse period, but local memory chipmakers still can make money as their cost are mostly at around, or even lower US$2 per unit,” commented an industry insider with market researcher DRAMeXchange, who requested not to be named.

Prices would bounce back in the second half as rising demand for faster DDRII would boost chip prices, he said.

Average price of mainstream 256Mb (32Mb*8) 400MHz DDR DRAM fell 0.69 percent from the previous trading session to US$3.69 per unit yesterday, according to DRAMeXchange.

ProMOS yesterday also said it planned to boost capital spending to US$800 million this year from US$500 million spent last year.

ProMOS shares rose 1.06 percent to NT$14.35 on the nation’s over-the-counter market, or the Greitai Securities Market (櫃台買賣中心).

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