Tue, Jan 25, 2011 - Page 12 News List

Nanya posts fourth consecutive loss

DOLDRUMS:The computer memory chipmaker saw a loss of NT$10.12bn last quarter, continuing a trend in which it has had only one profitable quarter in the last three years

By Lisa Wang  /  STAFF REPORTER, IN TAOYUAN

Nanya Technology Corp (南亞科技), the nation’s No. 2 computer memory chipmaker, yesterday posted its fourth consecutive quarterly loss in the period from October to last month, blaming disappointing corporate PC replacements and chip oversupply for the steeper-than-expected 38 percent quarterly decline in chip prices.

Losses ballooned to NT$10.12 billion (US$345 million) in the fourth quarter, from losses of NT$2.27 billion in the third quarter, according to a company statement. The Taoyuan-based chipmaker eked out NT$199 million in the final quarter of 2009, the only profitable quarter in more than three years.

“Demand for corporate PC replacements only trickled in the second half of last year rather than the big wave of renewal as I had expected,” company spokesman Pai Pei-lin (白培霖) told a media briefing.

“PC makers have piled up excessive inventories and they are digesting them now,” Pai said.

Nanya counts Dell Inc and Hewlett-Packard Co (HP) as its major customers of computer memory chips, or dynamic random access memory (DRAM) chips.

“[The price] is approaching the bottom,” Pai said. “We are seeing some companies in the supply chain restocking now ... A pick-up could set in late this quarter, or in the second quarter.”

However, he did not expect a sharp rebound on inventory concerns.

Output in this quarter is expected to grow 30 percent from last quarter, Nanya said.

This year, capital spending will almost halve to more than NT$12 billion, from NT$23 billion last year, with its focus shifting to non-PC memory manufacturing, Pai said.

“Taiwanese DRAM companies have to diversify into [other businesses],” Pai said. “We are selling memory chips for servers to new customers like Facebook, Amazon and Google rather than just Dell, HP and IBM.”

Pai expected non-PC memory chips, which are used in servers, smartphones and tablet devices, to account for as much as 40 percent of revenue by the end of this year.

For all of last year, Nanya’s losses narrowed to NT$15.1 billion, down from NT$20.75 billion in 2009. Revenues grew 33 percent to NT$56.54 billion last year from NT$42.46 billion in 2009.

Separately, Pai said that Nanya was not in talks to sell a stake in Inotera Memories Inc (華亞科技), a DRAM joint venture between Nanya and Micron Technology Inc, to US memory giant Micron, dismissing a report by Bloomberg on Jan. 13.

Inotera yesterday reported bigger losses of NT$4.6 billion for the quarter ending on Dec. 31, from losses of NT$2.62 billion in the previous quarter. Inotera earned NT$475 million in the fourth quarter of 2009.

Inotera also planned to expand about half of its total capacity to higher-priced DRAM used in servers and mobile devices at the end of this year, Inotera president Charles Kau (高啟全) said at the same media briefing.

This year, Inotera plans to spend at least NT$17 billion on technological migration to the cost-effective 42-nanometer (nm) technology, down from NT$55 billion spent on new equipment last year.

The company said it plans to allocate extra spending for technological upgrades to next-generation 36nm or 37nm technology in the middle of this year.

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