Powerchip Semiconductor Corp (力晶半導體), the nation’s biggest computer memory chipmaker, yesterday reported its fourth consecutive quarterly loss as chip prices collapsed amid a severe glut. However, the company said it expected to break even next quarter as the market recovers from a slump lasting more than a year.
The company said that net losses in the quarter ended March 31 narrowed to NT$9.74 billion (US$322 million), compared with losses of NT$14.11 billion in the final quarter of last year. The company posted a profit of NT$7.53 billion in the first quarter of last year.
Powerchip also said yesterday that it had cut its planned capital expenditure this year to NT$28.3 billion, from its original target of NT$34.5 billion.
“We have weathered the severest period in the dynamic random access memory [DRAM] industry’s history,” Powerchip chairman Frank Huang (黃崇仁) said. “The worst is over.”
Huang said that losses for the full year would likely drop compared with last year’s NT$12.33 billion.
DRAM prices extend their recent gains and rise to more than US$2 next month — the break-even level for Powerchip — from US$1.93 per DDR2 1Gb 138Mx8 yesterday, Huang said.
He forecast that the company would see a significant decline in losses this quarter and may break even in the third quarter, aided by better chip prices and its increasing migration from 70-nanometer process technology to more advanced 65-nanometer technology allowing it to cut more chips from a wafer in the second half.
However, Liu Szu-liang (劉思良), of Yuanta Core Pacific Capital Management (元大京華投顧), disagreed.
“The likelihood is slim for Powerchip to break even next quarter as supply still greatly exceeds demand,” Liu said.
Powerchip’s first quarter results fell short of Liu’s expectations of losses of NT$7 billion.
Smaller rival Nanya Technology Corp (南亞科技) also reported yesterday that losses narrowed to NT$8.78 billion in the first three months of the year, compared with losses of NT$11.27 billion in the final quarter of last year. The chipmaker made NT$3.29 billion in net profits a year ago.
The chipmaker’s average selling price dropped at a slower quarterly pace of 18 percent in the first quarter, compared with a 33 percent price decline in the fourth quarter of last year.
However, the company does not expect a fast turnaround, with spokesman Pai Pei-ling (白培霖) saying DRAM prices would have to rise another 30 percent from current levels for the firm to break even.
Contract prices next month could rise more than 10 percent from this month on easing oversupply, Pai told reporters.
Supply in the second half may be tight given limited output expansion, he said.
Both Nanya and Powerchip said output increase would rise by an annual rate of 65 percent, which Powerchip said would be a healthier pace than the growth rate last year.
As the industry remains weak and cash generated from operations is low, investors are concerned whether the companies can raise enough funds to support capacity expansion, Liu said.
Nanya plans to raise NT$10 billion in the second half to fund the expansion of its first 12-inch (300mm) factory. The chipmaker plans to spend NT$40 billion on capital expenditure this year.
Intoera Memories Inc (華亞科技), a memory chip joint venture between Nanya and Qimonda AG, said losses widened to NT$4.18 billion in the first quarter, compared with losses of NT$3.66 billion in the fourth quarter of last year. It earned NT$3.88 billion a year ago.