Thu, Apr 26, 2012 - Page 12 News List

Macronix falls into red as chip prices plummet

By Lisa Wang  /  Staff reporter

Macronix International Co Ltd (旺宏電子), which supplies memory chips to Japanese video game console maker Nintendo Co, yesterday reported its first quarterly loss in six years as prices fell at a steeper-than-expected pace amid sluggish demand.

The slower-than-expected production ramp-up at its new 12-inch factory added pressure to already weak gross margins last quarter because of higher manufacturing expenses, Macronix said, adding that it had underestimated the difficulty in integrating equipment.

Macronix recorded a loss of NT$1.09 billion (US$37 million) in the first quarter, reversing net profits of NT$1.06 billion in the same period last year and NT$981 million in the fourth quarter of last year, according to company statements.

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

First-quarter gross margin shrank to 14 percent, the lowest level since the first quarter of 2006, compared with 42 percent in the previous year and 37 percent in the final quarter of last year.

“We think the first quarter will be our worst quarter this year based on current bookings,” Macronix chairman and chief executive officer Miin Wu (吳敏求) told a media briefing.

“The business will improve gradually over the rest of the year, and we think there’s a chance for Macronix to eke out a quarterly profit [later this year],” Wu said.

Wu said the company’s gross margin should recover to about 40 percent within the next two years, or two-and-a-half years after the new fab started producing memory chips using advanced 32-nanometer process technology.

This quarter, prices for NOR flash memory chips are expected to stabilize, helped by recovering demand, after plunging 30 percent quarter-on-quarter — far sharper than the company’s forecast of a 10 percent drop — in the first three months, Wu said.

NOR flash chips, which are used to store configuration data in a wide range of digital products, accounted for about 60 percent, of Macronix’s revenue of NT$5.1 billion last quarter, up from 44 percent a quarter ago, as demand for another type of memory, ROM, plummeted.

Macronix, which shipped most of its ROM chips to Nintendo, does not expect its ROM business to improve significantly this quarter because of seasonal factors.

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