DRAM chipmaker Nanya Technology Corp (南亞科技) yesterday posted its weakest quarterly net profit in about four-and-a-half years for last quarter, on unfavorable foreign exchange rates and falling chip prices, but the company expects prices to rebound in the first half of this year as the industry enters a new upcycle.
Nanya said that 5G-related applications, including smartphones, and the stay-at-home economy are set to fuel DRAM demand in the first two quarters and beyond.
The resurgence of COVID-19 is driving demand for TVs with ultra-high-definition 8K or 4K screens, Chromebooks and new game consoles as people stay at home for work, education and entertainment, the chipmaker said, adding that demand for servers is also picking up.
Photo: Grace Hung, Taipei Times
As customers have been trying to secure more chips since the second half of last quarter, “we are seeing prices increase on a monthly quarterly basis,” Nanya president Lee Pei-ing (李培瑛) told investors during a virtual news conference yesterday.
“There is a good chance of seeing the uptrend to continue into the second half of this year,” he added.
Lee’s confidence is built on favorable supply-demand dynamics as DRAM supply is to lag behind demand in the first six months of this year, indicating a supply scarcity, he said.
Last quarter, net profit plunged 43.6 percent to NT$911 million (US$32.01 million), compared with NT$1.61 billion in the previous quarter. That represented an annual contraction of 29.2 percent from NT$1.29 billion.
Earnings per share fell to NT$0.3 last quarter, compared with NT$0.53 a quarter earlier and NT$0.42 a year earlier, the lowest since the second quarter of 2016. Average selling prices contracted about 5 percent quarter-on-quarter, while shipments slid by a low-single-digit percentage.
The strong appreciation of the New Taiwan dollar has reduced the company’s revenue by 3.6 percent quarter-on-quarter, it said.
For the whole of last year, net profit contracted 19 percent to NT$7.67 billion, from NT$9.83 billion in 2019. Excluding the effect of unfavorable foreign exchange rates, the chipmaker said that net profit last quarter would have surpassed that of 2019.
Gross margin dipped to 25.7 percent last year from 31.9 percent in 2019. Revenue expanded 17.9 percent to NT$61 billion from NT$51.73 billion in the previous year, 60 percent to 65 percent from the consumer electronics segment.
Servers only accounted for 6 percent to 7 percent, falling short of the chipmaker’s expectations, Nanya said.
The firm said it is accelerating development of the second generation of its 10-nanometer process technology as it has started a pilot run of its first-generation technology.
It aims to start a pilot run of the second-generation technology by the end of this year, Nanya said.
To fund the technology upgrade, Nanya plans to raise capital expenditure for this year to NT$15 billion, from NT$8.47 billion last year.
Nanya expects little change in shipment volume this year from last year.
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