Powerchip Semiconductor Corp (力晶半導體), the nation’s top maker of computer memory chips, posted smaller quarterly losses yesterday. Net losses improved to NT$7.27 billion (US$240 million) in the second quarter, primarily from losses of NT$9.44 billion in the first quarter, the chipmaker said.
“The improvement is helped by a slight rebound in prices in the second quarter and better cost efficiency because of improving yield,” company vice president Eric Tan (譚仲民) said by telephone.
Looking forward, “we are cautious about the price trend as the subprime crisis and inflation could affect demand,” Tan said.
Furthermore, the Olympic Games next month could also slow down the PC distribution channel in light of stricter security checks, capping PC demand, Powerchip chairman and chief executive officer Frank Huang (黃崇仁) said at an investors conference yesterday.
On the positive side, Huang said glut could ease as supply in the second half will be limited and PCs would come with more memory space, or 2 Gigabytes per unit in the fourth quarter, from 1.6 Gigabyte at present.
With 16 years in the memory chip industry, Huang said he has seen the market go through different cycles and believes that in the past two years the industry has gone through a prolonged consolidation phase.
To reassure investors that Powerchip remains a highly competitive business, Huang said Powerchip had started booking net cash inflow in the second quarter and that it would generate more cash in the fourth quarter helped by an improving market situation.
“Some companies may not survive, but Powerchip will come out on top because it is cost efficient and well positioned in the marketplace,” he said.
Huang highlighted Powerchip’s cash position as quarters-long losses would make it difficult for computer memory chipmakers to upgrade technologies and expand capacity, leading to a new wave of consolidation in the industry.
As of the second quarter, Powerchip had NT$50.4 billion in cash and cash equivalence, Huang said.
The company is also ahead of the industry in terms of mass producing using 65-nanometer technology, while competitors are still perfecting 70-nanometer production, he said.
Huang said the firm would not engage in unnecessary expansion or technology migration this year. Powerchip intends to spend NT$24 billion on new equipment, 17 percent less than the NT$29 billion estimated earlier this year, Tan added.
As for Rexchip Electronics Co (瑞晶半導體), a joint venture with Japan’s Elpida Memory Inc, Huang told investors that the venture was the only computer memory company making profits at the moment.
Frank Wang (王安亞), executive director at Morgan Stanley Research, was concerned that Powerchip’s revenues were boosted by profits from Rexchip.
Powerchip president Brian Shieh (謝再居), however, said the firm’s second-quarter report did not include contributions by Rexchip. In future, monthly reports would not include Rexchip, while consolidated reports would, he said.
ADDITIONAL REPORTING BY LISA WANG
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