Monday, March 31, 2008
Elpida Memory Inc., Japan's largest computer-memory maker, plans to raise prices 20 percent in April, easing concern the glut that drove chipmakers to record losses in the $31 billion market will persist.
Elpida will inform computer makers that it plans to increase prices 10 percent in the first half of next month and another 10 percent in the second half of April after demand rose and inventory levels fell, Chief Executive Officer Yukio Sakamoto said in a Bloomberg Television interview broadcast today. The shares jumped, leading gains among Asian memory chipmakers.
Sakamoto's proposal clashes with UBS AG and Macquarie Group Ltd. projections that prices won't rebound from near-record lows until the second half of this year, after slumping 85 percent in 2007. Should Tokyo-based Elpida convince its customers, the chipmaker would give rivals such as Samsung Electronics Co. leverage to negotiate the biggest increase in prices since July.
``Elpida's gesture opens the door for other players to follow suit,'' said Eric Yao, who helps manage $152 million, including shares of computer makers, at Truswell Securities Investment Trust Co. in Taipei. ``When prices are elevated, everyone in the industry benefits because producers now lose money on every chip sold.''
Higher prices will help Elpida return to profit in the next 12 months, Sakamoto, 60, said. The operating loss in its fiscal year ending March 31 is ``not far off'' from the 20 billion yen ($201 million) estimated by Mitsubishi UFJ Securities Co., he said, declining to provide specific numbers.
``Now is the right time to raise our pricing,'' Sakamoto said. ``Nobody can make profits at these levels; the market should really return to health now.''
By: DocMemory
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