Fri, Oct 26, 2007 - Page 12 News List

Powerchip posts loss for Q3

By Jessie Ho  /  STAFF REPORTER

Powerchip Semiconductor Corp (力晶半導體), the nation's largest maker of computer memory chips, yesterday posted its second consecutive quarterly loss, after chip prices hit the bottom by a glut.

Net loss was NT$1.9 billion (US$58.46 million), or NT$0.31 a share, on revenue of NT$17.92 billion, compared with net income of NT$7.79 billion, or NT$1.29, on revenue of NT$25.53 billion a year ago.

The loss, however, has narrowed from NT$3.8 billion, or NT$0.56 per share, in the last quarter.

Gross margin was negative 13 percent, improved from negative 16.49 percent in the second quarter.

"The situation will start improving from next month, after the worst period in September and October," Powerchip chairman Frank Huang (黃崇仁) told investors yesterday.

"We will keep upgrading our technology and reduce costs to weather the tough period," he said.

Powerchip shares rose NT$0.05, or 0.3 percent, to close at NT$14.80 on the Taiwan Stock Exchange yesterday. The company released its third-quarter figures after the stock market closed.

Chip price, which was US$6.7 per unit in the beginning of the year, is expected to climb to US$2 to US$2.5 per unit in March from US$1.2 per unit, Huang said.

Inventories will be gradually digested from next month, and production growth will not exceed 50 percent next year after a glut this year, Huang said.

The faster replacement of LCD TVs and increasing demand for Microsoft Corp's new Vista operating system will also drive up chip prices, he said.

Powerchip planned to reduce costs by upgrading its process technology, hoping to apply more advanced 70-nanometer technology to all its production starting in January next year, and use 60-nanometer technology in part of production from the second half of next year, Huang said.

But market watchers were not so optimistic about the market.

"We don't see any catalyst for the next three to four months," said Chung Hung-teh (鍾宏德), an analyst at Capital Securities Corp (群益證券). "The first quarter is a slow season for PCs after all."

Of Powerchip's total capital expenditure of NT$70.6 billion for this year, NT$48.3 billion has been spent, including more than NT$12 billion on building a second plant for Rexchip Electronics Corp (瑞晶電子), a 50-50 joint venture with Elpida Memories Inc of Japan.

Rexchip started mass producing 30,000 12-inch wafers a month at its first plant in Taichung, and the production will be expanded to 70,000 wafers per month in the first quarter next year, and maybe to 100,000 wafers per month by the end of next year after the completion of the second plant, Huang said.

For the first three quarters of the year, the Hsinchu-based company reported a net income of NT$1.79 billion, or NT$0.23 per share, compared with earnings of NT$11.99 billion, or NT$2.01 per share, in the same period last year.

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