Tue, Oct 03, 2006 - Page 12 News List

Powerchip posts record sales on back of price surge

By Lisa Wang  /  STAFF REPORTER

Powerchip Semiconductor Corp (力晶半導體), the nation's biggest manufacturer of computer memory chips, said that monthly sales set a record high last month due to a pick up in chip prices as supply was unable to meet seasonal demand.

The chipmaker said yesterday that it would gain more strength month on month by the end of the year, fueled by growing demand ahead of the launch of Microsoft Corp's new operating system and new game.

The launch "would increase demand for memory chips in the final quarter," said Eric Tan (譚仲民), a vice president of Powerchip, adding that an increase in output would also accelerate growth.

Sales for last month more than doubled to NT$10.46 billion (US$315.75 million), compared to NT$4.26 billion a year ago. That brought the memory chipmaker's total revenues in the third quarter to NT$25.53 billion, up 36 percent at quarterly pace.

Demand stimulated by the back-to-school shopping spree and weeklong national holiday in China, along with supply constraint, prompted the price for memory chips to rise significantly last month, Tan said.

The spot price for mainstream memory chips has rallied over 70 percent to US$5.11 on average over the past three months, according to market researcher DRAMeXchange, based in Taipei.

Looking ahead, "Powerchip expects to be able to maintain this [upward] trend in monthly sales growth," Tan said.

Powerchip sold most of the chips it made on the spot market.

Smaller local competitor ProMOS Technologies Inc (茂德科技) yesterday also posted historical high sales for last month, benefiting from strong chip prices amid short supply.

Sales last month expanded to NT$7 billion, more than doubling from NT$2.66 billion during the same period last year. ProMOS said it racked up a total of NT$18.23 billion in revenue for the last quarter, up 56 percent from NT$11.66 billion in the second quarter.

Climbing chip prices and growing output resulting from a gradual transition to cost-efficient 90-nanometer processing technology were the main reasons behind the strong results, company spokesman Ben Tseng (曾邦助) said in a statement.

Powerchip shares were unchanged at NT$21.15 yesterday, while shares of the nation's No. 2 computer memory chipmaker Nanya Technology Corp (南亞科技) jumped 1.8 percent to NT$22.2.

ProMOS shares fell 0.15 percent to NT$13.15.

Nanya Technology will release its September sales figures later this month.

Despite the strong monthly results, Citi Group's George Chang (張家麒) lowered its rating on Powerchip to "hold" from "buy" last week on growing concern for inventory buildup in upcoming months and a glut next year.

Chang kept his "hold" rating on Nanya and "sell" rating on ProMOS unchanged. Citi Group also downgraded the world's major memory chipmakers Micron Technology Inc and Samsung Electronics to "hold" last month.

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