Nanya Technology Corp (南亞科技), the nation’s No. 2 computer memory chipmaker, yesterday posted the second-highest quarterly losses in the chipmaker’s history amid a downward spiral in prices and large inventory write-offs.
The Taoyuan-based chipmaker said it was not out of the woods yet as chip prices still remained well below its cash-cost level despite a nascent rebound, company spokesman Pai Pei-lin (白培霖) told a press briefing in Taoyuan County’s Linkou Township (林口).
“We do not expect a significant recovery until this summer as demand sags,” Pai said. “Now we are only seeing inventory buildup demand.”
In the final quarter of last year, Nanya’s losses narrowed slightly to NT$10.38 billion (US$308 million), from a revised NT$11.2 billion in losses in the fourth quarter of 2007, during which the chipmaker posted record high quarterly losses.
Nanya said it has booked around NT$2 billion in inventory write-offs for the quarter ending Dec. 31 after prices of computer memory chips, or dynamic random access memory (DRAM) chips, plunged 40 percent quarter-on-quarter.
HITTING BOTTOM
Output would fall by up to 20 percent quarter-on-quarter in the first three months of this year and prices for its chips may jump more than 10 percent quarter-on-quarter this quarter after hitting the bottom last month, Pai said.
He added that constant production cuts could help boost chip prices further.
As business remains bleak, Nanya said prior to the Lunar New Year that the firm would try its best to file an industry consolidation proposal including a government bailout request to the Ministry of Economic Affairs.
The proposal is likely to involve Inotera Memory Inc (華亞科技) and ProMOS Technologies Inc (茂德科技).
Inotera is a joint venture between Nanya and the US chipmaker Micron Technology Inc, which acquired a 35 percent stake from Qimonda AG last November.
“It is very difficult for DRAM makers to push for industry consolidation by themselves,” Pai said.
“We will submit our consolidation proposal only after we can make sure that the government will accept it,” Pai said.
Nanya may make Inotera a platform to absorb other local DRAM players, said Inotera president Charles Kau (高啟全), who is in charge of bridging the gap between the government, Nanya and Inotera over the consolidation issue.
Nanya would file the proposal jointly with Inotera and Micron. The proposal may include a consolidation plan, a bailout request and a longer bank loan extension, Kau said.
Inotera yesterday reported record high quarterly losses of NT$6.57 billion for the final quarter of last year.
The company made NT$3.66 billion during the same period of 2007. The chipmaker had NT$5.4 billion in cash as of the end of fourth quarter, Kau said.
For the whole of last year, Nanya almost tripled its losses to NT$35.23 billion from 2007, while Inotera accumulated NT$18.07 billion in losses last year.
Inotera planned to spend NT$6 billion this year on adding new equipment to make chips using Micron’s stack technology with a pilot run scheduled in the third quarter, Kau said. Inotera is currently making chips on Qimonda’s trench technologies.
NEW EQUIPMENT
Last year, Inotera spent NT$17.7 billion on new equipment, lower than NT$30 billion planned, while Nanya also spent less at NT$12 billion rather than NT$20 billion budgeted originally.
“I prefer Inotera as it has healthier cash flow and financial structure than its peers,” Kenneth Lee (李克揚), a semiconductor analyst with Primasia Securities Co Ltd, said yesterday.
Besides, Inotera had a good chance to win the government’s financial support by playing a key role in pushing for consolidation among the nation’s DRAM makers as it has strong technological abilities, Lee said.
He gave shares of Inotera a “buy” rating.
CITIGROUP
Citigroup also has a buy rating on Inotera for the company’s better EBITDA (earnings before interest, taxes, depreciation and amortization) margin structure among Taiwan’s DRAM makers, Citigroup Global Markets said in a client note dated Monday.
Citgroup said it maintained a sell recommendation on Powerchip Semiconductor Corp (力晶半導體), the nation’s largest computer memory chipmaker, and Nanya Technology due to these firms’ weak competitiveness and potential dilution risk, the note showed.
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