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Researcher predicts quarterly loss for memory chipmakers

Computer memory chipmakers could post their first losses in two years during the current quarter at the earliest, driven by further price decline on weaker-than-expected demand, market researcher DRAMeXchange (集邦科技) said yesterday.

The contract price for computer memory chips dropped almost 10 percent during the first half of this month to approximately US$3.87 per unit from two weeks ago, the Taipei-based researcher said in a statement released yesterday.

That caused the price of benchmark memory chips, or dynamic random access memory (DRAM) chips, to drop by close to 30 percent to US$3.87 per unit on contract basis compared with the beginning of the year, DRAMexchange said in a statement.

"If the downtrend continues, the DRAM makers producing chips on higher costs would post their first losses in the first quarter or the second quarter, as happened in 2005," DRAMeXchange said.

DRAMeXchange calculated that the cost for DRAM makers could be between US$2.75 and US$3.63 per unit based on the price for DRAM modules.

The drastic price decline fast eroded the gross margin for DRAM companies in the third and fourth quarters of last year, it added.

The recent plunge exceeded the expectations of the Taipei-based researcher, which had projected the contract price for DRAM chips would hold steady before this month.

On the contrary, steep decline has driven the contract price for the first half of this month lower than the average US$3.94 apiece for the same chip traded on the spot market, the researcher said.

Contract prices are usually higher than spot prices.

Nanya Technology Corp (南亞科技), the nation's second-biggest DRAM maker, also anticipated that DRAM price would be stable in the first three month of the year on the launch of Microsoft Corp's Vista operating system.

Nanya Technology, which sells 70 percent of its output on contract basis, has the biggest exposure on the contract market among its local rivals including Powerchip Semiconductor Corp (力晶半導體).
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