Macronix International Co (
Macronix may report a net income of NT$639.8 million (US$18.5 million), or NT$0.17 a share, in the three months to June 30, compared with a net income of NT$1.6 billion in the year-ago period, according to the average estimate of five analysts surveyed by Bloomberg News. Sales fell to NT$5.2 billion from NT$6.3 billion. The company will announce earnings today at 12:30pm local time.
Almost a third of Macronix' sales were to Nintendo Co, whose introduction of the GameCube video-game console in September will boost Macronix's net income in the third quarter, analysts said.
"We will see some improvement in profit," said Keon Han, an analyst with Bear Stearns & Co. "Nintendo's on track to deliver the GameCube."
Macronix makes flash memory chips that store software programs in games and other consumer electronics products until they are erased or upgraded. The company also makes so-called mask ROM, or read-only memory, chips that permanently store software.
While falling prices of flash-memory chips have hurt profits at Intel Corp and Advanced Micro Devices Inc, the impact on Macronix, which also supplies chips to Mitsubishi Electric Corp, Hewlett-Packard Co and Palm Inc, should be less because it makes products for a niche in which there are few rivals, analysts said.
"Macronix's chips are not mainstream flash memory for cell phones like Intel and AMD," said Andrew Lu, an analyst with Salomon Smith Barney Securities Taiwan. Prices for Macronix' chips are expected to fall about 65 percent this year after plummeting 50 percent in the first half, he said.
Some investors said they are watching for indications of a recovery in the third quarter, which may come with increased sales to Nintendo.
"I'm still waiting for a signal of improvement," said Lu Yi-fen, who helps manage US$113 million in equities at First Global Hitech Fund, 4 percent of which are Macronix shares. "Nintendo should help bring more business to Macronix." Expansion Macronix said it plans to spend about US$5.9 billion to build two plants that will make 300mm silicon wafers by 2004.
The dinner-plate-sized wafers will cut production costs up to 30 percent from the 200mm wafers more commonly made today by more than doubling the number of chips yielded.
About a quarter of Macronix's capacity was idle in the second quarter, analysts said. The company has kept its plants running closer to full production than larger Taiwanese chipmakers Taiwan Semiconductor Manufacturing Co (TSMC,
TSMC and UMC used less than half of their capacity in the second quarter as global chip demand fell.
Chipmakers boost profitability by keeping capacity use in their plants as close to 100 percent as possible, thereby avoiding depreciation costs.
Macronix' capacity use benefits from the company's strategy of making custom memory chips for games and other electronic products, according to Miin Wu (
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