Wed, Apr 22, 2009 page11

• Elpida to raise memory prices by up to 50 percent

  SUPPLY GLUT: The Japanese firm said it planned to lift prices to US$1.50 per gigabit of memory next month, adding that was about how much it costs to make a chip

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  Elpida Memory Inc, Japan’s largest maker of computer memory chips, plans to raise prices as much as 50 percent, aiming to break even by June as industry-wide production cuts help ease a supply glut.

  “The leftover inventory at personal-computer and module makers that was skewing the ­demand-­supply balance is finally gone,” Elpida president Yukio Sakamoto said in an interview yesterday.

  Tokyo-based Elpida will raise prices to US$1.50 per gigabit of memory starting next month after inventory levels fell, he said.

  That price is about how much it costs to make a chip, Sakamoto, 61, said.

  “We simply won’t sell for less than that,” he said.

  Prices of the benchmark dynamic random access memory (DRAM) chips climbed 52 percent this year to US$1.10 on Monday, according to DrameXchange Technology Inc, operator of Asia’s biggest spot market for semiconductors.

  Nanya Technology Inc (南亞科技), Taiwan’s second-biggest DRAM maker, said last week it had raised prices this month, suggesting relief was in sight for the US$23.6 billion industry.

  “The production cut among chipmakers has helped reduce the inventory level at the end market,” said Robert Chuang (莊育清), who helps manage US$700 million at HSBC Asset Management Ltd (匯豐中華投信) and doesn’t hold shares of DRAM makers. “However, chipmakers also face the challenge of whether computer makers will accept the price increases since they can always get them cheaper” from Samsung Electronics Co.

  DRAM makers lost a record US$12.5 billion from 2007 until the end of last year, said Andrew Norwood, a Gartner Inc analyst in London. DRAM sales may fall 24 percent this year, Dramexchange said.

  Nanya said last Thursday it planned to raise prices by about 10 percent in the second half of this month, its second such hike in the four-week period. The chipmaker said it’s in talks with customers, including Hewlett-Packard Co and Dell Inc.

  Elpida, which in February reported its fifth consecutive quarterly loss, aims to turn profitable in the second half of the fiscal year which started on April 1, Sakamoto said.

  The company will report its ­earnings results for the year just ended on May 12.

  “The recent price recovery is largely supply-driven, as personal-computer demand remains rather weak,” Yuichi Ishida, an analyst at Mizuho Financial Group Inc, said by telephone yesterday. “Elpida should see its losses narrow each quarter, but full-year profitability is difficult to see in the current macroeconomic environment.”

  Elpida’s net loss widened to ¥72.4 billion (US$737 million) in the three months to Dec. 31, from ¥12.1 billion a year earlier, the company said in February. It recorded an operating loss of ¥57.9 billion as revenue dropped 34 percent to ¥61.8 billion.
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