Macronix International Co (旺宏電子), Taiwan's third-largest chipmaker, expects to return to profit this year after three quarters of losses as Nintendo Co, its biggest customer, orders more chips for video games.
"Nintendo will triple output with us in the second half," Macronix Chief Executive Officer Miin Wu (吳敏求) said in an interview.
"They plan to release some big titles." Nintendo, the world's second-largest video-game maker, will order more so-called mask-ROM chips for memory cards that store games in its hand-held Game Boy Advance machine, Wu said. Macronix idled half its capacity and wrote off inventory after Nintendo cut orders late last year.
The Japanese gamemaker said last week it was teaming up with Namco Ltd, the maker of the Pac-Man arcade game, to develop video-game software and expand its range of game titles. The company, which has focused on developing the GameCube, is now shifting more resources toward Game Boy Advance, Wu said.
To be sure, some investors said it's premature to expect chipmakers to benefit from rising demand among gamemakers like Nintendo, even though game shipments typically rise in the second half because of holiday season sales.
"We don't know how that will affect Macronix's bottom line," said Pedro Tai, who helps manage US$120 million in equities at ABN Amro Asset Management Taiwan Ltd. He doesn't own Macronix shares.
Even so, Macronix plans to hire 27 percent more staff this year as part of a NT$18 billion (US$520 million) expansion, Wu said.
The company's two chip plants will be operating at close to full capacity and plans are under way to sell 800 million new shares overseas to fund expansion at a new factory, he said.
Macronix's new chip plant will help boost production of so-called flash-memory chips. Macronix has developed technology that enables the chips to store more memory at a cost that's competitive with larger rivals such as Intel Corp, the world's biggest chipmaker, Wu said.
Flash chips retain memory until it is upgraded.
Macronix will offer the chips to mobile-phone makers by the second half. About half of Macronix's production is in mask-ROM chips, while flash products account for about 25 percent. The rest of production is in non-memory chips. Mask-ROM chips store memory permanently in devices.
An improvement in the company's profit outlook still depends on whether prices of flash chips that store software rise and a glut of the chips is eliminated, investors said.
"We'll to have to wait for firmer signs of a recovery," Tai said.
The company hopes to increase production of flash-memory chips during the next few years, Wu said. Macronix, the world's largest maker of mask-ROM chips, said that product will be the company's primary source of sales and profit for several years.
Macronix said earlier it expects a full-year profit of NT$927 million, or earnings per share of NT$0.27, on sales of NT$25 billion.
The company turned to a first-quarter loss of NT$2.7 billion, or NT$0.81 a share, compared with profit of NT$1.9 billion, or NT$0.56, a year earlier. Sales fell 59 percent to NT$2.8 billion.
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