Winbond Electronics Corp (華邦電子) yesterday said net income expanded for the second straight quarter to NT$269 million (US$9.27 million) as gross margin improved to the highest level in three quarters, but the results are a far cry from the same period of last year.
Second-quarter net profit more than doubled from NT$118 million in the first three months, the local memory chipmaker’s financial statement showed. On an annual basis, the results represented a sharp decline from NT$1.24 billion in the second quarter of last year.
Gross margin rose to 17 percent last quarter from 14 percent in the first quarter, the best since the second quarter of last year, when gross margin stood at 24 percent.
Winbond’s second-quarter net profit was lower than the NT$314 million estimated by Concord Securities (康和證券), according to a report on July 19.
Concord gave a “neutral” rating on Winbond, saying the company was under growing pricing pressure for its mobile DRAM chips and weak growth momentum for specialty DRAM, which was its biggest revenue source, making up 42 percent last quarter.
Winbond supplies mobile DRAM chips to customers including Micron Technology Inc and Spansion Inc, Concord said.
Winbond said oversupply was hurting prices for its chips across the board this quarter and orders for its mobile DRAM chips could reduce further as customers are digesting excessive inventories and shifting to new platforms. Specialty DRAM demand would also be flat.
“Winbond is cautious about the third quarter, which used to be the peak season, because of the impact of the US and Europe debt crisis. The company will optimize its product portfolio to cope with fast changes in the industry,” the company said in a filing to the Taiwan Stock Exchange.
Mobile DRAM chips accounted for 25 percent of the total revenue of NT$7.42 billion last quarter, down from 28 percent in the first quarter because of weak handset demand in China, it said.
However, it expects to see some progress in its flash memorychip business as firms start to design products using its new chips in the second half of this year.
Flash memorychips made up 34 percent of Winbond’s revenue, making the business its second-biggest revenue source.
Winbond shares closed limit-down yesterday at NT$7.08, having fallen 17.77 percent so far this year, compared with the TAIEX’s decline of 12.48 percent over the same period.