Ailing Powerchip Semiconductor sees Q1 profits halved

Powerchip Semiconductor Corp (力晶半導體), the nation's second-biggest memory-chip maker, reported first-quarter profit dropped 53 percent on a decline in prices of semiconductors that store computer data.

Net income fell to NT$1.01 billion (US$32 million), or NT$0.15 a share, from NT$2.17 billion, or NT$0.38, a year earlier, the company said in a statement yesterday.

Gross margin narrowed to 14 percent from 27 percent the previous year, according to the statement.

"Powerchip's profit margin wasn't very strong," as prices fell for its biggest product, the so-called double-data-rate (DDR) dynamic random access memory, or DRAM, said James Huang (黃建銘), an analyst at SinoPac Securities Corp (建華證券).

Benchmark prices of DDR fell about 4 percent during the first quarter, according to Taiwan-based Dramexchange, Asia's biggest spot market for chips.

Powerchip plans to raise production of flash memory, reducing its reliance on DRAM. The company's capacity expansion in the next few years will be mainly in flash memory, president Brian Hsieh (謝再居) said on Jan. 25.

Powerchip's sales, reported previously, rose 16 percent from a year earlier to NT$14.8 billion in the first quarter.

Powerchip's sales growth lagged behind rival Nanya Technology Corp's (南亞科技) because it "was slower in moving toward a new generation of products," Chen Liway, an analyst at Polaris Securities Co (寶來證券), said in a telephone interview on April 19.

Nanya's first-quarter profit rose to NT$2 billion, from NT$992 million a year earlier. Sales rose 37 percent to NT$14.9 billion.