Sat, Mar 10, 2007 - Page 12 News List

Nanya Technology says gross margins to drop this quarter

By Lisa Wang  /  STAFF REPORTER

Nanya Technology Corp (南亞科 ), the nation's second-largest maker of computer memory chips, said yesterday gross margin would decline in the current quarter as prices plunged more than expected.

The average selling price (ASP) was expected to drop roughly 15 percent this month from last month after a 21-percent monthly decrease last month, instead of the single-digit percent monthly decline estimated by Nanya Technology earlier this year.

"The price decline is faster than our estimate. Sales of the Vista [operating system] have not spurred demand yet," Nanya Technology vice president Pai Pei-lin (白培霖) said during a luncheon with reporters. "This will affect our gross margin [for the first quarter]."

Gross margin jumped to 37 percent in the fourth quarter of last year from 19 percent a year ago. Net income also set an all-time high at NT$6.47 billion (US$196.3 million), or NT$1.7 a share.

Revenues for the current quarter may not exceed that of the fourth quarter, Pai said.

Nanya Technology posted record high revenues of NT$22.33 billion for the final quarter of last year.

In the first two months, it accumulated NT$12.09 billion in revenues, up 28.55 percent from a year ago, helped by rising shipments.

Looking ahead, Pai said visibility for the second quarter was vague.

"We hope demand will pick up in the third quarter along with the peak season for PC sales," Pai said.

To cope with future demand, Nanya Technology plans to start building its second 12-inch wafer plant in the second half of this year.

Nanya Technology said it planned to spend NT$31.5 billion on new facilities and equipment next year, about half of the planned NT$60 billion in capital spending for this year.

To foot the bill, the company's board approved a fund-raising proposal to issue 960 million new shares.

But the company said yesterday it would also consider issuing corporate bonds worth roughly NT$30 billion.

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