Powerchip Semiconductor Corp (
"Prices plunged at a faster pace than we expected in the first quarter, primarily due to sagging demand as a shortage of Intel Inc's chipsets slowed computer [shipments]," chairman Frank Huang (
Memory prices fall
The price of dynamic random access memory (DRAM) chips fell over 25 percent in the first quarter to below US$3 per unit, the level Huang previously predicted for the current quarter.
During the first three months of the year, Powerchip's earnings fell 33 percent to NT$2.17 billion, from NT$3.23 billion a year ago. Earnings per share slid to NT$0.52 per share on revenue of NT$12.76 billion.
"We believe the second quarter should be the bottom rather than the third quarter, as in previous times. April should be the worst in terms of price," Huang said.
Huang expects a recovery to occur in the third quarter, from rising demand for new memory chips when a technology transition -- from the current DDRI memory chips to higher density DDRII chips -- takes hold in the second half.
Before that, chip prices should remain between US$2.3 and US$2.5 per unit in the second quarter as the computer industry enters a slow season, Huang said.
The spot price for the mainstream 256 megabit DRAM chips has plunged over 40 percent since the beginning of the year, hitting US$2.38 per unit yesterday, according to the Taipei-based online price setter DRAMeXchange.
Second-quarter risk
"Further price drops could put Powerchip at risk of swinging to losses in the second quarter [which would be the first loss in seven quarters]," said Frank Wang (
Wang said chip prices remain under heavy pressure.
In an earlier report, Wang projected Powerchip would be able to eke out profits of NT$0.25 a share for the second quarter. The cautious view came after Powerchip's first-quarter result fell short of his expectations.
He has predicted the chipmaker will make NT$0.72 a share.
Weak demand
Paul Tsai (
"We haven't seen any clear signs indicating the industry is approaching bottom. Demand remains weak now," Tsai said after the investor's conference.
Taiwanese memory chipmakers such as Powerchip, Nanya Technology Corp (
Shares of Powerchip have slid about 8 percent since the beginning of the year.
The company's shares closed at NT$23.95 yesterday on the nation's over-the-counter market, the Gretai Securities Market.
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