Thu, Jan 31, 2013 - Page 14 News List

Macronix losses widen on weak demand, prices

SWINGING BACK:The firm aims to make a profit in Q3 with high-density memory chips, strong seasonal demand and better factory efficiency, and break even for the year

By Lisa Wang  /  Staff reporter

Memorychip maker Macronix International Co Ltd (旺宏電子), which counts Japanese video game console maker Nintendo Co as one of its major clients, yesterday said its quarterly losses widened to NT$1.78 billion (US$60 million) last quarter due to weaker-than-expected demand and a decline in prices.

However, Macronix expected to swing back to profitability in the third quarter becuase of sales of new, more expensive high-density memory chips, high seasonal demand and better factory utilization rate, company president Lu Chih-yuan (盧志遠) told an investor teleconference.

Macronix aimed to break even when it gave its full-year financial results this year, Lu said.

Last quarter marked the fourth consecutive quarterly loss for Macronix. The chipmaker lost NT$1.18 billion in the third quarter of last year, its financial statement showed.

That brought Macronix’s overall losses last year to NT$5.44 billion, compared with net profits of NT$2.92 billion in 2011.

“Shipments of ROM-type memory chips fell short of our expectations and price erosion from Nor Flash memorychips was severe,” Lu said.

Prices for NOR Flash memory chips, Macronix’s biggest source of revenue, dropped 5 percent last quarter from the previous quarter, Lu said. Marconix ships NOR Flash memory chips mostly to Chinese feature phone clients, he said.

ROM-type memory chip shipments, which are used in consumer electronics, plunged 29 percent last quarter from the third quarter, Macronix’s financial statement showed.

Nintendo is Macronix’s biggest client for ROM-type memory chips. Nintendo yesterday cut its shipment forecast for its new Wii U video game console to 4 million units from 5.5 million units this year.

This quarter, factory utilization is expected to rise to 93 percent, compared with 75 percent in the final quarter of last year, Lu said, adding that 93 percent would be an almost break-even rate of usage.

“We need to build inventory in advance of the busy season in the third quarter, when demand usually suddenly goes up. Also, customers are increasing orders for high-density NOR Flash memory chips. We need to build inventory for new high-density memory chips, which consume much more wafer capacity than existing products,” Lu said.

Macronix aims to boost revenue contribution of high-density memory chips to 16 percent this year, compared with 7 percent last year, Lu said.

High-density memory chips are usually used in devices in telecommunications sector, industrial sector and automotive sector, Lu said.

Reduction in factory usage and chip prices shrank Macronix’s gross margin to 3 percent last quarter from 11 percent in the third quarter of last year and 37 percent in the fourth quarter of 2011.

Macronix planned to increase capital spending to NT$3.6 billion from last year’s NT$2.75 billion

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