Thu, Jun 05, 2008 page12

• Nanya eyes back-to-school demand

  MARKET MOMENTUM While Nanya Technology predicted a recovery next quarter, analysts warned of dire consequences if the slump were to last into the fourth quarter

  • By Lisa Wang and Kevin Chen / STAFF REPORTERS
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  Nanya Technology Corp (南亞科技), the nation’s second-largest manufacturer of computer memory, said yesterday that while prices could recover at a slower pace this month because of weak PC demand, it expects momentum to resume next quarter driven by back-to-school demand.

  The comments could further strengthen market sentiment that the computer memory industry is recovering gradually from a slump that began a year ago.

  “The price may increase by less than 10 percent in June from May because of sagging PC sales in April and May,” company spokesman Pai Pei-lin (白培霖) told a press briefing. “But July, August and September should be a better period, driven by back-to-school shopping.”

  Pai said that a 15-hour output disruption at a Chinese plant of Hynix Semiconductor Inc earlier this month may also start to spur demand next month as supply is reduced.

  Therefore, he said, it was possible that prices of dynamic random access memory (DRAM) may rebound to about US$3 per unit, a level at which analysts believe major DRAM makers would make good profits.

  As the average selling price of DRAM chips, used in computer memory, bounced back by 13 percent last month as a glut in the market eased, Nanya’s revenues expanded 23 percent month-on-month to NT$3.33 billion (US$109.7 million), Pai said.

  However, the figure still represented an 11 percent decline year-on-year, the company said in a statement.

  Shipments last month increased 8 percent from April, but expanded more than 50 percent from a year ago, the company said.

  Personal computers are likely to be equipped with more memory by the end of this year, which would offset slowing demand for PCs, Pai said.

  For all of this year, Nanya expects shipments to grow 70 percent year-on-year and to expand by between 40 percent and 50 percent next year, a slower pace than the expansion of the past few years, following the overcapacity-driven downturn that started last year.

  The combined losses at Taiwan’s five major DRAM makers — Nanya, Inotera Memories Inc (華亞科技), Powerchip Semiconductor Corp (力晶半導體), ProMOS Technologies Inc (茂德科技) and Winbond Electronics Corp (華邦電子) — expanded slightly to NT$32.8 billion in the first quarter from NT$31 billion in the fourth quarter of last year, Taiwan Ratings Corp (中華信評) analyst Shirly Kuo (郭妍希) said in a report released yesterday.

  While the market downturn has lingered well into the first quarter of the year and despite the sizable losses incurred in the last two quarters, local DRAM companies should be able to cover their near-term debt repayments throughout this year with sufficient cash and credit facilities, the report said.

  “With their stronger credit positions in 2008, DRAM makers will likely emerge from this downturn relatively unscathed,” Kuo and her colleague Raymond Hsu (�?M) wrote in the report titled Taiwan’s DRAM Makers Face Another Challenging Year.

  The report said local DRAM makers avoided the risk of a credit crisis following an abrupt market downturn last year because of their strengthening capital base and market position, as well as anticipated reductions in their capital expenditures.

  “If the current slump in demand lasts into the fourth quarter of 2008 due to DRAM makers’ inability to reduce capital expenditures or on declining demand under weaker global economic conditions, domestic DRAM makers could see high refinancing pressure and default risk, given their growing debt maturity in 2009,” the report said.
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