Nanya beating a retreat from DRAM market

By Lisa Wang  /  Staff reporter, in Taoyuan

Thu, Oct 25, 2012 - Page 13

Nanya Technology Corp (南亞科技) yesterday said it expected to slowly retreat from the PC DRAM battlefield as it seeks to emerge from chronic losses over the past 14 quarters.

Nanya, the nation’s top PC DRAM chipmaker, said it had decided to exit the PC DRAM and server DRAM market gradually. The company would focus on memorychips used in consumer electronics instead, company president Charles Kau (高啟全) told a press conference.

This means Taiwan would be reduced to a very minimal supplier in the global PC DRAM market given that Powerchip Technology Corp (力晶科技) and ProMOS Technologies Inc (茂德科技) are also exiting the volatile PC DRAM market by slashing DRAM chip production to as low a level as possible this year.

Nanya was pinning hopes on this strategic move to help get it out of the woods, Kau said.

“We have lost the ground to compete with a South Korean firm [Samsung],” he said.

Nanya would cut production of PC DRAM chips by 20 percent this month, company spokesman Lee Pei-ing (李培瑛) told reporters.

PC DRAM production would account for half of the company’s overall chip production and the portion would continue to shrink to about 10 percent in 2014, Lee said.

In the July to September period, the chipmaker reported a net loss of NT$10.09 billion (US$343.9 million), widening from a net loss of NT$6.68 billion in the second quarter. The results were disappointing because Nanya originally said its quarterly loss would shrink due to stabilizing chip prices.

Chip prices fell 9.5 percent last quarter from the second quarter, which also resulted in an inventory loss of NT$3.46 billion, Nanya said. Shipments fell 28 percent last quarter from a quarter ago, as demand dwindled ahead of the launch of new PCs running Windows 8.

For this quarter, Lee expects losses to hold steady, given stabilizing chip prices, falling inventory losses and a slight increase in demand for new Windows 8 PCs.

“We do not expect losses to widen this quarter … prices will hit the bottom. November should be the rough,” Lee said.

Nanya’s board approved selling as many as 109 million shares this quarter as a new fund-raising program to boost its book value, which is NT$0.12 per share at present.

Lee said Nanya had no plan to further streamline its workforce after eliminating 600 people by the end of this year. About 400 of the 600 workers affected would be relocated to Nanya’s parent company, Formosa Group (台塑集團), and Inotera Memories Inc (華亞科技).

Inotera Memories Inc (華亞科技), a DRAM joint venture between Nanya and US memorychip maker Micron Technology Inc, yesterday also reported a bigger quarterly loss at NT$4.39 billion for last quarter, compared with loss of NT$2.98 billion in the second quarter. It lost NT$7.02 billion a year ago.

Kau, who also doubles as chairman of Inotera, said the company had planned to make all of its 100,000 wafers in capacity on advanced 30-nanometer technology in April of next year.

The company’s product portfolio would be as diverse as those of Micron, he said.

In addition to PC DRAM chips, Inotera would make more mobile DRAM chips and memory chips for consumer electronics.