Nanya Technology Corp (南亞科技), Taiwan's second-largest maker of memory chips for computers, posted a lower-than-expected 7 percent year-on-year drop in quarterly earnings yesterday, as a rapid expansion in production partially offset a plunge in chip prices.
The decline was much slimmer than that reported by its bigger local rival, Powerchip Semiconductor Corp (力晶半導體), which earlier this week posted a 70 percent fall in third-quarter earnings, to NT$2.27 billion (US$67.4 million).
"The result surprised me. Nanya Technology's earnings and sales beat my estimate," said George Wu (
Nanya Technology said third-quarter earnings dipped slightly to NT$2.014 billion from NT$2.16 billion a year earlier. Earnings per share also fell to NT$0.53. Sales hit an all-time high at NT$14.3 billion during the three-month period ended last month, the company said.
The result represents a significant improvement from the second quarter, during which Nanya Technology reported losses of around NT$971 million.
Inotera's contribution
Faster-than-expected expansion in output, mostly from affiliate Inotera Memory Inc (華亞科技), was one of the major reasons behind the better performance, Wu said.
Inotera, which makes high-density memory chips at a cost-effective 300mm plant, is a 50-50 joint venture between Nanya Technology and Infineon Technologies AG of Germany.
Inotera contributed NT$660 million to Nanya Technology's NT$817 million in non-operating income, Nanya Technology spokesman Pai Pei-lin (
"The bit [production] growth mostly from Inotera in the third quarter exceeded our previous forecast," Pai said.
Nanya Technology's output increased 27 percent in the third quarter, exceeding the planned 20 percent, Pai said.
Memory-chip prices slumped 44 percent during the third quarter from a year ago, Pai said.
Oversupply to ease
Looking ahead, Pai said that memory-chip prices would hold steady in the current quarter because of seasonal demand and an easing supply glut as rivals such as Samsung Electronics Co shift into production of NAND flash memory chips for handsets or digital music players.
"In the fourth quarter, we think the PC market will still be reasonable -- about 10 percent quarter-on-quarter growth. The seasonal market is still there," Pai said.
Nanya Technology supplies memory chips to the world's biggest computer vendors, including Dell Inc.
Despite the impressive quarterly result, investors expressed concern about the company's progress in building its own 300mm fab.
"We doubt Nanya Technology will be able to maintain its competitiveness in the industry without having a cost-saving 300mm factory," said Dennis Lai (賴學緯), a senior analyst with Grand Cathay Securities Investment Trust Co (大華投信).
Pai told investors that the construction of the 300mm fab is on schedule, but declined to give details.
Nanya Technology released its earnings report after the local stock market closed. Its shares dropped the 7 percent daily limit to NT$16.7 yesterday on the benchmark Taiwan Stock Exchange after a Chinese-language newspaper said China's biggest chipmaker, Semiconductor Manufacturing International Corp (中芯國際集成電路), may dump memory chips to improve factory utilization.
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