Wed, Jul 20, 2011 - Page 12 News List

Nanya Technology losses narrow

‘DIFFICULT PERIOD’:The company is on track to boost shipments of non-PC memory chips to 50 percent, which it hopes will minimize the impact of a volatile DRAM market

By Lisa Wang  /  Staff Reporter, in TAOYUAN

Nanya Technology Corp (南亞科技) yesterday posted a tepid improvement from the previous quarter as prices crashed last month on mounting worries that a faltering US economic recovery and the eurozone debt crisis would curtail consumer demand in developed countries.

That dampened sentiment on the prospects for Nanya Technology this quarter.

“Market demand plunged all of a sudden in June after HP [Hewlett-Packard Co] said PC sales were disappointing. Since then, the market has been undergoing tremendous changes,” Nanya Technology vice president Pai Pei-lin (白培霖) said yesterday, referring to one of Nanya’s customers.

“As PC sales to consumers were weak, we are seeing customers’ inventories rising to surpass normal levels,” Pai said. “We have not seen that any of our clients are going to increase inventory for a back-to-school PC buying spree ... It is difficult to foresee when the inventory digestion will end.”

The average selling price (ASP) for DRAM chips is expected to drop by between 10 percent and 15 percent this month from last month on a contract basis, Pai said, adding that the chipmaker was also under heavy pressure to cut prices further next month as there were no signs of a quick recovery in demand.

Backed by 10 percent quarterly hikes in ASP, Nanya’s quarterly losses narrowed slightly to NT$7.9 billion (US$273 million) in the second quarter from losses of NT$9.03 billion in the first quarter, the chipmaker’s financial statement said. That also compared with losses of NT$1.09 billion in the second quarter of last year.

While revenues grew 7 -percent to NT$11.47 billion last quarter from NT$10.73 billion in the previous quarter, shipments of PC DRAM chips grew 2 percent last quarter from the first quarter, shooting its inventory levels up to one month, double the healthy level of two weeks, the chipmaker said.

“The third quarter will be another difficult period for Nanya. Tablet devices are still cannibalizing the standard notebook computer market,” said Liu Szu-liang (劉思良), a DRAM analyst with Yuanta Securities Investment Consulting (元大投顧).

To minimize the impact of the volatile DRAM market, Nanya said it was on track to increase shipments of better-priced non-PC memory chips to half of the company’s overall shipments by the end of this year from 35 percent currently.

The price of memory chips used in servers was more than 30 -percent higher than PC DRAM chips, Pai said. Nanya supplies memory chips for servers to Internet search giant Google Inc and social network company Facebook.

This quarter, output is expected to grow by between 10 percent to 20 percent from last quarter as the chipmaker would produce a lot more chips by migrating to 42-nanometer technology, which helps chipmakers double their output compared with older--generation 50-nanometer technology.

Inotera Memories Inc (華亞科技), the PC DRAM joint venture between Nanya and US memory chipmaker Micron Technology AG, yesterday also said losses improved to NT$3.91 billion last quarter, from losses of NT$4.04 billion in the first quarter.

Talking about its technological roadmap, Inotera said it was set to start a pilot run on 30-nanometer technology and it expects to reach mass production in the first quarter of next year.

Like Nanya, Inotera was also shifting its business to non-DRAM chip areas. Last month, shipments of chips used in servers increased to a landmark 10 percent of its total shipments, company president Charles Kau (高啟全) said.

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