DRAM chipmaker Nanya Technology Corp (南亞科技) yesterday said that net profit last quarter hit the lowest in three years as a supply glut drove down prices.
DRAM prices are expected to stabilize this quarter and rebound afterward, as the world’s major chipmakers try to stem the price decline by reducing their inventories to a healthy level, the company said.
Net profit last quarter fell 19.8 percent to NT$2.21 billion (US$71.66 million), compared with NT$2.75 billion in the second quarter.
On an annual basis, net profit plunged 83 percent from NT$12.87 billion. Earnings per share fell to NT$0.72 from NT$0.9 in the second quarter and from NT$4.15 a year earlier.
Gross margin fell from 34.9 percent in the second quarter to 28 percent, as prices fell about 13 percent quarter-on-quarter.
However, shipments expanded 35 percent quarterly on the back of improving demand for PCs and consumer electronics ahead of the year-end shopping season, the chipmaker said.
Demand continues to increase for servers, PCs, mobile phones and consumer electronics, such as TVs, smart speakers and game consoles, Nanya Technology said.
The growth momentum is to slow down a bit this quarter after peaking in the third quarter, it said.
“Demand and supply are to reach a balance this quarter,” Nanya Technology president Lee Pei-ing (李培瑛) told a media briefing. “Prices are likely to remain flat this quarter, compared with last quarter,”
For the whole of this year, shipments are to expand 13 percent annually, in line with market growth, the company said.
Nanya Technology originally expected shipments to grow by a single-digit percentage this year from last year.
The outlook for next year is rosier, because as most memorychip suppliers “are conservative about capital spending next year; prices are most likely to bounce back in the first quarter next year,” Lee said.
“It is very likely that 2020 will be a better year than 2019. I am pretty confident about that,” Lee said.
However, it remains unclear whether it would be a V-shaped recovery, or a milder one, he said.
The company would remain cautious about its capital expenditures next year, given a nascent recovery in demand and lingering uncertainty about global trade and economy, Lee said.
The chipmaker plans to spend NT$7 billion on new facilities and equipment this year, much lower than last year’s NT$20.4 billion.
Commenting on increasing competition from Chinese peers, such as ChangXin Memory Technologies Inc (合肥長鑫存儲) and Tsinghua Unigroup Ltd (清華紫光), Lee said it would take more time for them to catch up, given high intellectual-property barriers.
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