Macronix International Co (旺宏) yesterday said net profit slumped 59 percent last quarter as an unfavorable foreign-exchange rate and lower utilization added to already weaker gross margin.
The COVID-10 outbreak has created a significant level of uncertainty, so the outlook for the current quarter is unpredictable, said the Hsinchu-based chipmaker, which makes memory chips used in Nintendo Co’s game consoles.
“We felt the [chip] price would trend up in 2020, due to supply constraints, but the Wuhan coronavirus has disturbed [the pace of a price pickup]. The outlook has become foggy,” Macronix president Lu Chih-yuan (盧志遠) told a teleconference.
Macronix now expects chip prices to be stable this quarter, after the industry experienced a drastic price correction last year, Lu said.
Macronix might see an impact from a shortage of Nintendo Switch, if the production of the game consoles is delayed or disrupted due to disruptions in components supplies from China caused by the outbreak, Lu said.
The company is closely monitoring developments, he said.
However, the company is not entirely pessimistic, as it expects to benefit from releases of new Nintendo game titles, Lu said.
It expects limited impact this quarter from the outbreak, as it has very few Chinese clients, he said.
In addition, “we have not seen any customers slow their 5G deployment so far. The 5G market looks healthy and in line with our expectations both in China and around the world,” Lu said.
Macronix supplies memory chips used in Huawei Technologies Co’s (華為) 5G base stations.
The company’s net profit dipped to NT$754 million (US$25.03 million) last quarter, compared with NT$1.85 billion in the previous quarter, and a contraction of 74 percent from NT$2.87 billion a year earlier.
Earnings per share dropped to NT$0.41 from NT$1.01 the previous quarter and NT$1.57 a year earlier.
Gross margin fell to 26 percent from 30 percent and 28 percent a year earlier, and the firm attributed the decline to lower prices, foreign-exchange losses and lower factory utilization.
It reduced production last quarter to alleviate inventory burden, and booked a NT$300 million impairment loss on inventory.
As inventory returns to normal levels, it is fully utilizing its factories and no impairment loss is expected this quarter, it said.
Macronix’s full year net profit tumbled 67 percent to NT$3.01 billion from NT$8.99 billion in 2018. Earnings per share dropped from NT$4.94 to NT$1.64.
The company plans to spend NT$8.7 billion on new equipment for 3D NAND flash memory chips this year, down from the NT$12.79 billion it spent on capital investments last year.
It plans to ramp up production of its first 48-layer 3D NAND flash memory chips by the end of this year.
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