Sat, Oct 27, 2012 - Page 14 News List

Winbond forecasts declining sales this quarter

MEMORY LOSS:Facing increasing competition from the mobile device sector, the maker of legacy memory chips continue to see declines in sales and profitability

By Crystal Hsu  /  Staff reporter

Winbond Electronics Corp (華邦電子), a currently unprofitable maker of memory chips used in laptops and handsets, said yesterday it expects sales to decline on low demand this quarter but forecast profit margins may stay flat as the company continues to make adjustments in its product mix.

“Business outlook for memory chips is grim, with sales projected to decline between 10 percent to 15 percent in the fourth quarter from the third quarter,” Winbond president Chan Tung-yi (詹東義) told an investors’ conference in Taipei.

Winbond posted fourth consecutive quarterly loss for last quarter at NT$325 million (US$11.09 million), a slight improvement from the second quarter's loss of NT$326 million. It lost NT$41 million a year ago, the financial statement showed.

Gross margin improved to 11 percent last quarter on a non-consolidated basis, from 6 percent in the second quarter. On a consolidated basis, gross margin was 18.1 percent last quarter, up from 15.96 percent in the second quarter, but down from 18.57 percent a year earlier, the statement showed.

The Hsinchu-based chipmaker may fare better than its local peers, based on one-month order visibility and the company’s continued effort to tap into business opportunities linked to smartphones, tablet computers and LCD TVs as well as peripherals and networking products supporting cloud services, Chan said.

Memory chips used in laptops, PC peripherals and feature phones are faced with more risks as mobile devices gain popularity with end-users, Chan said.

During the July-to-September period, the company posted NT$6.5 billion for non-consolidated revenue, shrinking 3 percent from the second quarter and 5 percent from a year earlier, as flash-memory business reported small gains but DRAM business saw significant losses, company data showed.

On a consolidated basis, revenue was NT$8.54 billion in the third quarter, representing declines of 5.84 percent from the second quarter and 3.55 percent from a year earlier, data showed.

Sales of specialty DRAM, which generated 44 percent of the company’s revenue last quarter, contracted 6 percent from the second quarter and from a year ago, Winbond said.

Revenue from Mobile RAM, which accounted for 13 percent of overall sales, declined 8 percent from three months earlier and represented a retreat of 23 percent from the year-earlier level, while flash memory, which underpinned 43 percent of total revenue, posted a sequential increase of 1 percent in sales, or a 5 percent gain from the same period last year, the company said.

Chan attributed the improvement in flash memory sales to strong demand for mobile devices with 58-nanometer process DRAM taking up more than 15 percent of flash sales.

For the first nine months, the company posted a net loss of NT$1.07 billion, or a net loss per share of NT$0.35. That was compared with a net income of NT$492.44 million, or earnings per share of NT$0.09, for the same period of last year. Consolidated revenue totaled NT$25.096 billion in the first nine months, down 8.3 percent from last year.

“The company is striving to turn a profit and may achieve this goal next year,” Winbond assistant vice president Jessica Huang (黃求己) said.

While sales are expected to weaken this quarter, profit margins may flatten or edge upwards amid product mix adjustments, Huang said.

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