Powerchip Semiconductor Corp (力晶半導體), the nation's largest memory chipmaker, said yesterday that the industry had bottomed out in the second quarter and expressed optimism toward a sustained upturn for chip pricing in the last half of this year.
"We expected the average selling price [ASP] of dynamic random access memory [DRAM] to rebound to the level of US$3 per unit in the third quarter," Powerchip's chairman Frank Huang (
Average spot prices for DRAM chips ended at US$2.46 per unit in the April-June quarter, down nearly 30 percent compared to US$3.46 per unit during the January to March period, according to the company.
Migration
The pricing uptrend will be driven by a possible decrease in supply amid a technology migration, as DRAM makers are shifting more capacity to produce DDR2 DRAM, Powerchip's president Brian Shieh (
Lower yields for the advanced DDR2 DRAM chips could drag down shipments, causing tighter supply of DRAM chips, Shieh said.
The spot price for 256-megabit, 400MHz DDR rose by 1.09 percent to an average of US$2.73 per unit with a daily high of US$2.95 per unit as of press time yesterday, according to the Taipei-based online trading venue for the chips, DRAMeXchange.com.
"Accordingly, we expected the company to turn operationally profitable in the current quarter," said Wang Bou-li (
Falling DRAM prices caused Powerchip's second-quarter earnings to tumble by nearly 60 percent sequentially to NT$850 million, or NT$0.17 per share, compared to first-quarter earnings of NT$2.1 billion, or NT$0.42 per share.
The company's smaller rival Nanya Technology Corp (
Powerchip outperformed the nation's other DRAM makers in the second quarter, but its gross margin of 4.9 percent was far below expectations, because amortizing the depreciation of its 12-inch fabs, or factories, caused an unexpected operational loss, SinoPac's Wang said.
The analyst had previously forecast a gross margin of more than 10 percent for the chipmaker, based on expectations of rising ASP, against a cost of around US$1.9 per unit.
Forecasts
Looking ahead, the chipmaker hopes to ship 105,000 wafers in the third quarter, double its 53,000 pieces in the previous quarter, and 160 million DRAM chips, up marginally from 156 million units in the second quarter, partly because of a production shift to the lower-yield DDR2 chips, Hsieh said.
Accordingly, DDR2 products are expected to make up 15 percent of total DRAM shipments in the current quarter, up from a mere 3 percent in the second quarter, and increase to 30 percent in the last quarter, on expectations that the advanced products will become the market mainstream -- with a roughly 50 percent market share -- by the year's end, the executive said.
Powerchip is set to break ground on its third 12-inch fab in the fourth quarter to enhance its capacity, and will complete pilot runs of advanced 90-nanometer process technology for DDR2 products in the last half of this year, the company said.
Shares of Powerchip ended 3.4 percent higher at NT$24.50 yesterday, while Nanya Technology Corp (
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