Macronix International Co Ltd (旺宏電子), which supplies memory chips to Japanese video game console maker Nintendo Co, yesterday posted its second consecutive quarterly loss as the low utilization rate of a new 12-inch wafer factory eroded gross margin as well as a steep decline in prices.
As gaming consoles enter peak season this quarter, Macronix expected shipments of ROM chips for consoles to grow from the last quarter, Macronix president Lu Chih-yuan (盧志遠) told a teleconference.
ROM chips accounted for 27 percent of Macronix’s NT$5.8 billion (US$192 million) revenue from April to last month, while NOR flash memory made up the biggest portion at 61 percent.
The firm’s net loss widened to NT$1.39 billion in the second quarter compared with a NT$1.09 billion loss in the first quarter, the firm said. A year ago, Macronix made a net profit of NT$515 million.
“We have known that we would face a tough period after opening a new 12-inch [wafer] plant. Now is the most painful period and market demand is weak,” Lu said. “The chips we produce cannot match the amount sold, resulting in low utilization.”
Because of the new factory’s operation, Macronix saw NT$1.97 billion in depreciation and amortization last quarter after booking NT$1.83 billion in the first quarter.
Gross margin plunged to 11 percent last quarter, compared with 14 percent in the previous quarter and 37 percent in the year before.
“The second quarter was the toughest. It will improve gradually,” company chief financial executive Paul Yeh (葉沛甫) said, citing slower decline in prices.
About 60 percent of the NT$7.6 billion inventory in the second quarter was due to the new factory and because of low demand, Lu said. Macronix hopes to reduce inventory to around NT$6 billion in the quarter ending Sept. 30, he said.
Overall, factory utilization dropped to 84 percent last quarter from 88 percent in the first quarter and 92 percent a year ago, the company said, while average selling prices plunged 13 percent sequentially from last quarter, Lu said.
He said the company has no share buyback plan to boost its share price, which yesterday rallied 1.96 percent to NT$7.8 after four straight sessions of decline.