Thu, Jul 28, 2011 - Page 12 News List

Macronix International income drops 52 percent

By Jason Tan  /  Staff Reporter

Macronix International Co Ltd (旺宏電子), which supplies memory chips to Japanese game console maker Nintendo Co, saw net income drop more than 50 percent in the second quarter this year on weaker demand for its ROM memory chips.

Net income fell 52 percent from the first quarter to NT$515 million (US$17.2 million), translating to earnings per share of NT$0.15.

Income fell 77 percent from NT$2.3 billion in the second quarter last year. Sales in the second quarter were NT$6.3 billion — a drop of 4 percent sequentially and a fall of 14 percent from last year.

Sales fell short of its original guidance of NT$6.4 billion to NT$6.8 billion, while its gross margin of 34 percent met its guidance of between 34 percent and 36 percent.

“The earthquake in Japan in March prompted our client to place fewer orders,” president Lu Chih-yuan (盧志遠) said yesterday.

Nintendo placed substantial ROM orders with Macronix in January, paving the way for the launch of its new 3DS console in March.

However, the March 11 earthquake and tsunami prompted Nintendo to shelve the launch of more game titles which use Macronix’s ROMs, it said.

Sales of Macronix’s ROMs slumped 52 percent in the second quarter from the first quarter, while those for NOR flash chips rose 28 percent, according to the company’s statistics.

Lu said efforts to diversify into new markets with NOR flash chips — such as handsets, industrial applications and automotive solutions — will help expand NOR sales in the third quarter, cushioning the expected decline in ROM sales.

NOR flash chips are non-volatile computer storage chips used in laptop computers, digital cameras and mobile phones.

Macronix forecast sales would be NT$6.4 billion to NT$6.6 billion in the third quarter.

“There won’t be any upside for us in the third quarter — traditionally a peak season — but there may be good news in the fourth,” Lu added.

Its key client is not expected to place many orders in the current quarter, but may order more chips in the fourth, he said.

Macronix shares closed flat at NT$18.3 on the Taiwan Stock Exchange yesterday, before the earnings announcement.

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