DRAM chipmaker Nanya Technology Corp (南亞科技) yesterday said it plans to halve capital spending for this year as the industry faces an overcapacity-driven downturn.
Demand took a nosedive last quarter amid growing downside risks from the global economy and the US-China trade dispute, the chipmaker said.
The negative sentiment stalled demand for mobile phones, PCs and servers, it said.
As a result, Nanya Technology saw net profits plunge 38.2 percent in the fourth quarter to NT$7.95 billion (US$257.95 million), compared with NT$12.87 billion in the third quarter of last year.
Gross margin last quarter shrank to 52.9 percent from 58.9 percent in the prior quarter, the company said in a financial statement.
Last year as a whole, Nanya Technology saw net profits slide 2.3 percent to NT$39.36 billion from NT$40.3 billion in 2017.
However, operating profits soared to an all-time high of NT$39.36 billion, from NT$18.79 billion in the previous year, benefiting from booming demand in the first nine months of last year.
The chipmaker expects last quarter’s weakness to carry into at least the first half of this year.
“We are conservative about market outlook for the first and second quarters,” Nanya Technology president Lee Pei-ing (李培瑛) told a media briefing.
DRAM chip prices are likely to fall about 10 percent this quarter from last quarter after unexpectedly tumbling by a low-teen percentage in the final quarter of last year from the previous quarter, the memorychip maker said.
Lee was more optimistic than local market researcher TrendForce Corp (集邦科技), which has predicted a price drop of 20 percent this quarter from last quarter on a contract basis.
Nanya Technology has yet to see any signs that this quarter would form a bottom, Lee said.
“The price trend for the second quarter remains vague,” he said.
The chipmaker is banking on a seasonal pickup in the third quarter for a recovery.
There is a chance that the price decline might slow down in the third quarter, as seasonal demand and improving supply of Intel Corp’s microprocessors help stimulate consumption of DRAM output, Lee said.
To cope with weak demand, Nanya Technology plans to decrease capital expenditure to slow down production.
It might spend about NT$10.6 billion on new manufacturing equipment, only half of last year’s NT$20.4 billion.
The firm cut capital expenditure for last year by 15 percent from an original estimate of NT$24 billion as the DRAM industry last quarter entered a downcycle following a boom that lasted nine quarters.
With smaller capital spending, Nanya Technology expects output to grow 10 to 15 percent annually this year, decelerating from 35 percent last year.
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