Memorychip maker Winbond Electronics Corp (華邦電) yesterday said that this quarter would be its worst of the year in terms of average selling prices and factory utilization as customers signaled a pickup in demand for chips used in PCs and TVs amid falling inventory.
The Hsinchu-based chipmaker said it expects severe price cuts this quarter, with prices to remain at those levels throughout the year as oversupply and inventory corrections ease.
China’s reopening is expected to boost production there and spur a rebound in consumer spending in the world’s second-largest economy, Winbond said.
Photo: Grace Hung, Taipei Times
The growth spillover effect is expected to lift the global economy, it said.
“We expect the first quarter will be the bottom in terms of price erosion,” Winbond president James Chen (陳沛銘) told an online investors’ conference. “Oversupply is fading this year, with a marked improvement expected in the second half.”
“After strong inventory digestion efforts in the fourth quarter [last year] and the first quarter, we believe that inventory at PC vendors has dropped to quite a low level,” Chen said. “Customers told us the first quarter will be the bottom, followed by a gradual recovery in the second and third quarters.”
However, demand in the consumer electronics and networking segments remains vague, Winbond said.
People are still cautious about spending on non-essential items as retail prices remain high and central banks are on the course to hike interest rates further, although at a milder pace, it said.
As a result, Winbond does not expect a quick and significant improvement in its factory utilization this year.
Computer chips contributed 24 percent of the company’s memory chip revenue last year. The communications and consumer electronics segments made up 29 percent and 20 percent respectively. Devices for vehicles and industrial settings accounted for the remaining 27 percent.
In the final quarter of last year, Winbond’s memory revenue sank 18 percent sequentially and 39 percent annually to NT$9.4 billion (US$309.17 million).
As customers still have sufficient chips for production in the short term, Winbond expects its equipment loading rate to rise gradually after hitting the bottom this month.
Lower factory utilization took a toll on gross margin in the company’s memory business last quarter, when it was 33 percent. It was 48 percent in the third quarter and 47 percent in the fourth quarter of 2021.
However, the industrial slump did not deter Winbond from making technology upgrades and expanding capacity.
The memorychip maker said its new manufacturing factory in Kaohsiung entered volume production last month, using the new 25-nanometer technology to make DRAM chips.
Winbond aims to further its technology migration to 20-nanometers starting this summer.
The chipmaker also plans to boost the monthly capacity of the Kaohsiung plant to an economic scale of 14,000 wafers in the first quarter of next year, from 10,500 wafers, to improve costs.
Winbond expects the new plant to bring strong growth momentum in the following years as stronger technological capabilities and greater capacity allow it to broaden product lineups and to have greater flexibility in product strategy adjustments during downturns.
With the Kaohsiung plant entering production, Winbond expects this year’s depreciation and amortization costs to grow from NT$9.55 billion last year.
Capital spending on its memory business would drop sharply to about NT$12.1 billion, compared with NT$40.8 billion last year, it said.
CAUTIOUS RECOVERY: While the manufacturing sector returned to growth amid the US-China trade truce, firms remain wary as uncertainty clouds the outlook, the CIER said The local manufacturing sector returned to expansion last month, as the official purchasing managers’ index (PMI) rose 2.1 points to 51.0, driven by a temporary easing in US-China trade tensions, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. The PMI gauges the health of the manufacturing industry, with readings above 50 indicating expansion and those below 50 signaling contraction. “Firms are not as pessimistic as they were in April, but they remain far from optimistic,” CIER president Lien Hsien-ming (連賢明) said at a news conference. The full impact of US tariff decisions is unlikely to become clear until later this month
GROWING CONCERN: Some senior Trump administration officials opposed the UAE expansion over fears that another TSMC project could jeopardize its US investment Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is evaluating building an advanced production facility in the United Arab Emirates (UAE) and has discussed the possibility with officials in US President Donald Trump’s administration, people familiar with the matter said, in a potentially major bet on the Middle East that would only come to fruition with Washington’s approval. The company has had multiple meetings in the past few months with US Special Envoy to the Middle East Steve Witkoff and officials from MGX, an influential investment vehicle overseen by the UAE president’s brother, the people said. The conversations are a continuation of talks that
CHIP DUTIES: TSMC said it voiced its concerns to Washington about tariffs, telling the US commerce department that it wants ‘fair treatment’ to protect its competitiveness Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday reiterated robust business prospects for this year as strong artificial intelligence (AI) chip demand from Nvidia Corp and other customers would absorb the impacts of US tariffs. “The impact of tariffs would be indirect, as the custom tax is the importers’ responsibility, not the exporters,” TSMC chairman and chief executive officer C.C. Wei (魏哲家) said at the chipmaker’s annual shareholders’ meeting in Hsinchu City. TSMC’s business could be affected if people become reluctant to buy electronics due to inflated prices, Wei said. In addition, the chipmaker has voiced its concern to the US Department of Commerce
Popular vape brands such as Geek Bar might get more expensive in the US — if you can find them at all. Shipments of vapes from China to the US ground to a near halt last month from a year ago, official data showed, hit by US President Donald Trump’s tariffs and a crackdown on unauthorized e-cigarettes in the world’s biggest market for smoking alternatives. That includes Geek Bar, a brand of flavored vapes that is not authorized to sell in the US, but which had been widely available due to porous import controls. One retailer, who asked not to be named, because
RSS