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Powerchip suffers on price dive

Powerchip Semiconductor Corp (力晶半導體), Taiwan's biggest maker of computer memory chips, yesterday posted its lowest quarterly earnings in the past nine months as prices dived on a supply glut.

But the Hsinchu-based chipmaker expected the chip price decline to reverse in the middle of this quarter as the 60 percent decline since early this year is spurring demand.

Net income for the three-month period ending last month was NT$7.53 billion (US$227.04 million), or NT$1.1 per share, the worst results since the third quarter of last year.

Year-on-year, the earnings represented a more than six-fold growth from NT$1.01 billion, or NT$0.15 a share.

"I think April should be the trough. The price should gradually recover to US$2.5, or US$2.8 in mid-May [from US$2.3 in late March]," Powerchip president Brian Hsieh (謝在居) told reporters.

Hsieh's comments match smaller rival Nanya Technology Corp's (南亞科技) expectation for a rebound next quarter as customers have driven their inventory lower to about half of the previous levels.

"In the second quarter, Powerchip will be on the borderline [between net profits and losses], while most dynamic random access memory [DRAM] chipmakers will be under pressure to make profits," Hsieh said.

Hsieh said he was upbeat about the second half of the year and next year as computer vendors planned to launch computers with much larger memories to run the rich multimedia functions offered by Microsoft Corp's new Vista operating system.

Building on that optimism, Hsieh said Powerchip would carry on its capacity expansion plans.

Shipments would increase 13 percent this quarter, he said. This year, the chipmaker's output would grow 82 percent from last year including the output from Rexchip Electronics Corp (瑞晶), a joint venture with Japan's Elpida Memories Inc.

The new DRAM joint venture is scheduled to start ramping up production at its plant in Taichung in July, with a monthly output of 30,000 wafers in its initial stages. The company is also planning to start building its second factory in August.

Powerchip said it would spend NT$69 billion in capital this year, lower than the NT$85 billion spent last year.

Powerchip chairman Frank Huang (黃崇仁) was absent from yesterday's press briefing as he was involved in the investigations into the alleged insider trading of Veutron Corp (力廣) shares. Veutron is a subsidiary of the Powerchip Group (力晶集團).

Shares of Powerchip advanced 1.5 percent to NT$20.3 yesterday, outperforming the benchmark TAIEX index's 0.85 percent rise.
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