Powerchip Semiconductor Corp (力晶半導體), Taiwan's largest maker of computer memory chips, yesterday said fourth-quarter earnings set an all-time high for the second straight quarter, boosted by rising demand before the sale of Microsoft Corp's new Vista operating system.
The Hsinchu-based chipmaker also expected that growth momentum would not fade as quickly as in previous years.
"Chip prices just started to decline last week rather than right after the Christmas sales a month ago," chairman Frank Huang (
"This is a good sign," he added.
During the three month period ending Dec. 31, net income increased to NT$15.3 billion (US$466 million), or NT$2.47 per share, more than fourteen-fold from the NT$1.1 billion, or NT$0.2 per share, posted a year ago, according to the company.
"Demand from computer makers releasing new models to run the Vista system is growing, obviously, and will increase gradually," Huang said.
Microsoft is scheduled to launch the new operating system for retail customers by the end of this month following the launch for corporate customers last November.
The demand has driven the price for dynamic random access memory (DRAM) chips up by 30 percent in the last quarter, rather than the 30 percent decline predicted by some analysts, Huang said.
To cope with the expected demand from PC users upgrading their hardware later this year, Powerchip said its output would rise 15 percent this quarter, compared to the final quarter of last year.
"Powerchip's quarterly earnings are much better than I expected as DRAM prices did not start dropping in November as is usually the case," said Wang Wan-lin (王萬里), a memory industry analyst with Credit Suisse First Boston.
Wang had predicted Powerchip would earn NT$11 billion in net income for the last quarter.
Looking ahead, however, Wang said: "We could see a correction this quarter as demand may dip seasonally ... the fourth quarter [2006] could have been the peak for DRAM chipmakers."
Powerchip said net income for the whole of last year more than quadrupled to NT$27.33 billion, or NT$4.48 a share, compared to NT$6.43 billion, or NT$1.14 a share, a year earlier.
Summing up, Powerchip's Huang said: "We are optimistic about growth this year. I think we will report better earnings this year than last year."
Powerchip's optimism is also reflected in its capacity expansion, as it plans to increase output by 70 percent this year.
The chipmaker plans to spend NT$69 billion on new equipment and facilities in Taiwan, including investment in a new DRAM joint venture with Japanese memory chipmaker Elpida Memory Inc.
Shares of Powerchip rose 0.96 percent to NT$20.95 on the GRETAI Securities Market yesterday.
Credit Suisse First Boston's Wang rated Powerchip an "outperform" with a target price of NT$27.
RSS