Memorychip maker Macronix International Co Ltd (旺宏電子), which supplies chips to Japanese video game console maker Nintendo Co, yesterday posted its fifth quarterly loss in the first quarter because of weaker-than-expected seasonal demand and teething problems at a new factory.
The company’ losses widened to NT$2.09 billion (US$70.58 million) in the quarter ending on March 31, compared with a loss of NT$1.8 billion in the fourth quarter of last year and a loss of NT$1.11 billion in the same period last year.
“Demand in the first quarter was slower than usual and prices continued to decline,” Macronix chairman Miin Wu (吳敏求) told investors. “Shipments of ROM [chips] dropped annually for the first time as demand from key customers dwindled in the slack season.”
Gross margin fell to minus-4 percent from 2 percent in the prior quarter and 15 percent the previous year as production at its advanced 12-inch factory stalled.
However, the company said its operations are expected to improve this quarter.
“All signs indicate that the worst period is over,” Wu said. “Revenue will pick up in the second quarter. The first quarter’s NT$4.4 billion [in revenue] is the bottom.”
Demand for NOR flash chips, which are used in a wide range of devices, including smartphones, is still rising, Wu said.
NOR flash chips accounted for 67 percent of the company’s overall revenue last quarter.
Factory utilization is expected to rise to more than 90 percent this quarter from 84 percent last quarter, Macronix said.
Wu reiterated that the chipmaker is likely to swing back into profit next quarter, which is usually the peak season for the Hsinchu-based chipmaker as customers, Nintendo in particular, usually increase their orders ahead of Christmas.
“We will back in profit after overcoming this difficult period,” Wu said.
Macronix has identified the manufacturing problems that stalled production at its 12-inch factory and would fix the problems later this year, Wu said.
He said a smooth ramp-up at the factory was crucial for the company to return to profit.
As of last quarter, only 30 percent of its memory chips were made at the new factory.
Macronix is counting on the 12-inch factory to make advanced and cost-efficient memory chips.
The chipmaker’s board of directors has approved an extra NT$2.6 billion investment in new equipment to solve the manufacturing problems.