Macronix International Co (旺宏電子), the world’s biggest NOR flash memory chipmaker, yesterday said that its net profit last quarter fell 18 percent from the previous quarter, while gross margin dipped due to a higher inventory write-off and increased shipments of lower-margin memory chips to Nintendo Co.
Net profit last quarter fell to NT$1.92 billion (US$62.04 million) from NT$2.33 billion in the third quarter of last year, with earnings per share of NT$1.05, down from NT$1.28 a quarter ago.
“The third-quarter net profit slightly lagged behind our expectations, as business from Nintendo was a bit lower” than expected, Macronix chairman and chief executive officer Miin Wu (吳敏求) told an investors’ teleconference.
Inventory, most of which were prepared for Nintendo for the holiday shopping season, last quarter spiked 20 percent to NT$17.16 billion from a quarter ago, the company’s financial statement showed.
Gross margin last quarter fell to 18 percent from 24 percent in the second quarter and from 20 percent in the third quarter of last year.
Macronix said it is in talks with Nintendo to digest the inventory.
The US-China trade dispute and the US sanction on China’s ZTE Corp (中興) have reduced NAND flash memory chip orders from China, the chipmaker said.
That has caused revenue to fall 4 percent year-on-year to NT$10.03 billion last quarter, it said.
“It is difficult to predict how the market will act, especially with the trade row between the US and China. It is impossible to know how the trade tension will play out,” Wu said.
Electronics assemblers have been seeing slowing production, as their clients are cautious about placing orders due to the trade dispute and a shortage of passive components, Wu said.
Most of the assemblers manufacture their products at Chinese plants before shipping them to the US, he said.
Despite unfavorable market conditions, Macronix expects prices for its high-density and high-quality NOR flash memory chips to remain stable this quarter and next year, given limited supply, Wu said.
Macronix expects its factory to be fully utilized this quarter.
The chipmaker said it plans to allocate NT$14.2 billion on new equipment next year to upgrade 36-nanometer technology to 19-nanometer technology to produce 19-nanometer single-level-cell NAND flash memory chips.
Part of the capital would be used to produce low-density embedded multimedia card NAND flash memory chips, and to finance the research and development of 3D NAND flash memory chips, the company said.
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