Powerchip Semiconductor Corp (力晶半導體), Taiwan's biggest maker of memory chips for computers, yesterday reported a nearly 70 percent year-on-year decline in third-quarter earnings as chip prices collapsed on a supply glut.
But, the Hsinchu-based dynamic random access memory (DRAM) maker expects its fourth-quarter results to improve as prices are likely to stabilize after rebounding by around 13 percent sequentially during the July-September period.
"There's no room for DRAM prices to drop further," company chairman Frank Huang (
Huang's comments were slightly more optimistic than remarks from an executive at the world's top memory-chip supplier Samsung Electronics Co last Friday, who said that DRAM prices would drop by another 5 percent by the year's end.
But Huang said that as prices should hold steady, the company's net income should amount to between NT$8 billion (US$239 million) and NT$9 billion, or NT$1.5 per share, for the full year.
Powerchip's third-quarter earnings plummeted to NT$2.3 billion from NT$6.98 billion during the same period last year amid falling chip prices.
The spot price for the benchmark 256-megabit, 400-megahertz double-data-rate DRAM chip fell 42 percent during the third quarter to US$2.6, from US$4.52 a year ago, according to DRAMeXchange, a Taipei-based online clearinghouse for memory chips.
The company's sales for the third quarter also slid to NT$13.32 billion from NT$16.14 billion during the same period last year, the company reported earlier.
Earnings grew sequentially, from the NT$900 million reported in second quarter after gross margin recovered to 21.5 percent from 4.8 percent, the company said.
"The result is slightly better than my expectation," George Wu (
Powerchip's earnings per share also dropped to NT$0.41. In the first three quarters, Powerchip's accumulated earnings reached NT$5.32 billion, or about NT$1 per share.
To reach Huang's target for the whole year, Powerchip will have to earn at least NT$2.63 billion during the current quarter.
"Powerchip has a chance of hitting that high target as it is expanding its production and memory chip prices will only drop moderately," Liu Szu-liang (
Powerchip said output would expand by 18 percent this quarter from the previous quarter because of a better yield rate.
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