Nanya posts second loss as chip glut grips market

Nanya Technology Corp (南亞科技), Taiwan's second-biggest computer-memory chipmaker, posted a second straight quarterly loss after a glut pushed down prices.

The loss was NT$1.66 billion (US$51 million), or NT$0.35 per share, in the third quarter, compared with a profit of NT$5.17 billion, or earnings per share of NT$1.35, a year earlier, Taoyuan-based Nanya said today.

The result missed analyst estimates. Sales dropped 34 percent to NT$13.4 billion.

Lower prices for the main memory used in personal computers led to a loss at Nanya and smaller chip earnings at leading rival Samsung Electronics Co after PC makers didn't order as much as producers expected. Prices of benchmark dynamic random access memory (DRAM) chip tumbled 36 percent in the third quarter from the second, according to Dramexchange.com (集邦科技), Asia's biggest spot market for semiconductors.

"We didn't see any demand during the traditionally strong back-to-school season this third quarter," vice president Pai Pei-lin (白培霖) said at a briefing in Taoyuan.

DRAM prices are still "under pressure" this quarter and may recover in the middle of next year, Pai said.

Samsung, the world's largest memory chipmaker, said on Oct. 12 that third-quarter global PC shipments increased 10 percent from three months earlier, less than the 13 percent it estimated.

Nanya shares fell 3.9 percent to NT$21.25 at the close on the Taiwan Stock Exchange, before earnings were released. The TAIEX index dropped 2.6 percent.

The average estimate of nine analysts compiled by Bloomberg was for a profit of NT$130 million at Nanya. The company trails Hsinchu-based Powerchip Semiconductor Corp (力晶半導體) in Taiwan's memory market.

Nanya said it would maintain planned spending of NT$60 billion this year and trim the amount to NT$30 billion next year.

Its operating loss margin, or the percentage of sales left after taking away the cost of goods sold and administrative expenses, was 16 percent. A year earlier, the company had a profit margin of 20 percent.

Inotera Memories Inc (華亞科技), the memory-chip venture of Nanya and Qimonda AG, posted a 90 percent drop in third-quarter net income to NT$443 million. Profit missed the NT$548 million average of 12 estimates compiled by Bloomberg.

Inotera did not expect DRAM prices to recover until the first quarter of next year, president Charles Kau (高啟全) said at a briefing in Taoyuan, where the company is based.

Inotera would cut its planned spending by 12 percent to NT$45 billion this year and reduce it again to NT$30 billion next year, Kau said.

The company plans to raise between NT$9 billion and NT$10 billion in order to upgrade its factories by selling 300 million new shares in the fourth quarter, he said.