Wed, Jul 07, 2010 - Page 12 News List

Powerchip eyes record profits

By Lisa Wang  /  STAFF REPORTER

Powerchip Technology Corp (力晶), the nation’s No. 2 computer memory chipmaker, expects net profit to hit a record high this year, bolstered by recovering PC demand and a slow increase in chip supply, which could help stabilize chip prices later this year, a senior executive said.

An early beneficiary of the rebound, Powerchip yesterday reported its strongest net profit in 13 quarters at NT$6.77 billion (US$210 million), reversing losses of NT$11.73 billion in the same period last year.

That brought the chipmaker’s net profit in the first half to NT$10.27 billion, aided by the 146 percent spike in chip prices since the beginning of the year.

The company added that expanding PC replacement demand would help cushion computer memory prices in the second half of the year.

“The DRAM business is all about price,” company chairman Frank Huang (黃崇仁) told a media briefing.

“I’m quite optimistic about the third quarter ... DRAM prices could trade up or down by 10 percent in the third quarter [from the second quarter],” he said.

Prices for mainstream DRAM would trade within a narrow range of US$2 to US$2.50 per unit in the final quarter of the year because new chip supply would be limited as it would come from process technology migration rather than new fabs, Huang said.

As such, Huang said he “believes Powerchip’s business will exceed that of 2006 in terms of net profit.”

Powerchip posted a record net income of NT$27.33 billion in 2006, according to financial information posted on the company’s Web site.

This year, Powerchip’s output would more than double from last year partly because the chipmaker shut down most of its facilities in the first half of last year. That compares with rival Nanya Technology Corp’s (南亞科技) forecast 45 percent year-on-year output growth this year.

Powerchip plans to start making DRAM using advanced 63-nanometer (nm) process technology this month, which could save about 25 percent in costs compared with 68nm process technology.

The chipmaker has budgeted NT$13 billion to buy new equipment for migration to 63nm and 45nm process technologies this year.

Huang added that the company had repaid NT$49.15 billion in debts in the first six months of this year and aimed to lower its debt-to-equity ratio to about 20 percent next year.

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