Memorychip maker Winbond Electronics Corp (華邦電子) yesterday said that its net profit grew 40 percent sequentially last quarter due to a robust demand for low-density DRAM chips and higher prices.
Net profit surged to NT$2.26 billion (US$73.88 million) in the quarter ending June, from NT$1.61 billion in the first three months of this year. Earnings per share surged to NT$0.54 from NT$0.4.
Gross margin rose to an all-time high of 39 percent from 38 percent a quarter ago, as average selling prices continued their uptrend from the second quarter last year, Winbond said.
Capacity expansion also helped lift its gross margin, the company said.
“We are seeing growing demand for some DRAM products from first-tier customers, but growth has been hampered by limited capacity. We have to invest in new capacity,” Winbond president Chan Tung-yi (詹東義) told an investors’ conference.
The chipmaker said its factory utilization rate is close to 100 percent and should continue to run at full capacity in the second half.
Winbond’s board of directors is scheduled to discuss a proposed NT$355 billion investment in a new fab in Kaohsiung later this quarter, which should support Winbond’s growth next year and in 2020, Winbond said.
Last quarter, Winbond expanded its DRAM capacity by about 11 percent by upgrading to 38-nanometer process technology, and its DRAM revenue increased at a quarterly pace of 9.2 percent.
Winbond plans to continue its technology migration to 25 nanometers by the end of this year to increase capacity, Chan said, adding that this is a more cost-effective way to expand capacity.
“With growing demand for diverse applications and a stable capacity increase [worldwide], supply and demand for specialty DRAM should be stable in the second half,” Chan said.
DRAM accounted for about 53 percent of Winbond’s total revenue of NT$13.49 billion last quarter.
Winbond is the world’s biggest NOR flash supplier by shipments. Demand for this type of memory chip is rebounding to normal levels after dipping slightly in the first half, the company said.
“Supply and demand for NOR [flash] is quite healthy now,” Chan said.
“Winbond is less affected by market volatility because the company focuses on tier-one customers, which offer relatively stable prices,” he said.
NOR flash contributed 36 percent to the company’s revenue last quarter.
In the first half of this year, net profit more than doubled to NT$3.87 billion from NT$1.81 billion in the same period last year. Earnings per share jumped to NT$0.94 from NT$0.47.
Winbond plans to increase its capital expenditure by 26.3 percent to NT$19.2 billion this year.
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