Fri, Feb 10, 2012 - Page 12 News List

Macronix Q4 net profit dipped 12%, outlook sluggish

By Lisa Wang  /  Staff Reporter

Macronix International Co (旺宏電子), which supplies memory chips to Japanese video game console maker Nintendo Co, yesterday said that fourth-quarter net income decreased 12 percent year-on-year to NT$981 million (US$33.3 million) because of price erosion.

On a quarterly comparison basis, however, net income more than doubled from NT$359 million in the third quarter, thanks to a spike in orders from Nintendo.

The outlook for this quarter is dim, however, with orders from Nintendo expected to dwindle after the end of seasonal shopping, company president Lu Chih-yuan (盧志遠) told a media briefing.

The price of NOR flash memory chips — another major product — is also forecast to decline 10 percent sequentially following a 40 percent drop last year amid sluggish demand and intensifying competition, Lu said.

These, coupled with heavy depreciation expenses from its new 12-inch fab, could lead to a quarterly loss — the first in five years — he said.

The last time the chipmaker fell into red was in the first quarter of 2006, when it recorded a loss of NT$627 million.

“The first and second quarters will be a difficult period for Macronix as revenue will not grow much ... while spending on research and development and depreciation from the new plant will rise,” Lu said.

Business is expected to pick up in the second half of the year, he said, adding: “For the whole year of 2012, we will still be profitable.”

This quarter, revenue is forecast to plunge 38 percent to as low as NT$5.2 billion — below its break-even point of NT$6 billion — from the fourth quarter’s NT$8.4 billion, Macronix said.

Last quarter, more than half of its revenue came from ROM chips, which are primarily used in game consoles. This division’s share of total sales is estimated to drop to 30 percent this quarter, Lu said.

Net margin is forecast to plummet to between minus-5 percent and minus-10 percent this quarter, from 17 percent in the last quarter. Gross margin could shrink to between 20 percent and 24 percent this quarter, from 37 percent in the last quarter.

Factory utilization could fall to about 85 to 90 percent this quarter from the final quarter of last year.

Macronix budgeted NT$4.89 billion for capital spending this year, mostly for the new fab, down from NT$15.37 billion last year.

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