Macronix International Co Ltd (旺宏電子), which supplies read-only memory (ROM) chips to Japan’s Nintendo Co, yesterday posted 50 percent sequential growth in net profit last quarter, driven by a substantial royalty income from an intellectual property settlement with Toshiba Corp.
The royalty income totaling US$80 million helped boost Macronix’s net profits to NT$2.87 billion (US$92.93 million) in the quarter ending on Dec. 31 least year, compared with NT$1.92 billion a quarter earlier.
Last quarter’s earnings represented an 11 percent increase from NT$2.58 billion the same period a year earlier.
However, gross margin sank to 28 percent last quarter, from 35 percent a quarter earlier and 43 percent in the same period last year, as demand for NOR flash memory chips dwindled and prices dropped amid global trade uncertainty, Macronix said.
“The first quarter will be very tough, overshadowed by US-China trade tensions,” Macronix president Lu Chih-yuan (盧志遠) told investors in a teleconference call.
“We believe prices will extend their downtrend in the first half as there is huge uncertainty this year,” he said.
“Most of our customers balk at ordering as they are unwilling to hold inventories. Our distributors also intend to sell their inventories as soon as possible,” Lu added.
Heavy pricing pressure from high-end NAND flash memory chips is also bringing down NAND flash and NOR flash memory chip prices, he said.
NOR Flash memory chips constituted about 51 percent of the chipmaker’s total revenue of NT$8.98 billion last quarter, down from 55 percent a quarter earlier, while NOR flash memory chips made up 44 percent of total revenue, up from 30 percent.
The short-term slowdown would not derail Macronix’s capital spending and technological upgrades this year, Lu said.
The spending would help the chipmaker enter the new embedded multimedia card market and cope the rapidly growing demand for memory chips for the automotive sector, he said.
NOR flash memory chips for automobiles was Macronix’s fastest-growing business last year, with an increase in revenue of 14 percent.
The chipmaker said expects a significant recovery in the second half, if Washington reaches a deal with Beijing.
Macronix did not disclose its capital budget for this year.
Last year, the chipmaker spent NT$4.86 billion on new equipment for technological migration, compared with NT$2.22 billion in 2017.
Macronix saw its net profit soar 63 percent to NT$8.99 billion from NT$5.52 billion last year.
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