“Prices will trend up further in the third quarter from the second quarter because of the back-to-school demand,” Charles Kau, president of Inotera, said in an interview yesterday in Taoyuan, Taiwan, where the company is based.

Inotera joins Nanya in predicting chip prices will continue rising, after gaining 48 percent this year. Dell Inc. Chairman Michael Dell said last month he expects aging computers to be replaced after Windows 7 goes on sale Oct. 22 and Intel Corp. introduces new semiconductors that will speed up the machines.

“The third-quarter seasonal demand will help drive demand,” Jacky Lu, who helps manage $200 million at Allianz Global Investors Taiwan Ltd. in Taipei, said by phone in Taipei. Among the Taiwanese computer-memory chipmakers, Inotera is the best positioned, because it has funding from parent Formosa Plastics Group and technology from Micron, he said.

The price of the benchmark 1-gigabit dynamic random access memory, or DRAM, chip reached record lows in December, according to Taipei-based Dramexchange Technology Inc., Asia’s biggest spot market for semiconductors. Kau declined to comment whether the company will raise chip prices, saying the company “has no direct access and authority market pricing” as it’s a manufacture for two parent companies Micron and Nanya.

Post Losses

Inotera rose 0.7 percent to close at NT$14.40 in Taipei trading today. The shares have climbed 79 percent this year after tumbling 69 percent in 2008.

Inotera and other chipmakers began to post losses in 2007 after they overestimated the demand that would be created by the release of Microsoft Corp.’s Windows Vista operating system. Production cuts by chipmakers since the second half of last year have helped ease the glut.

Makers of memory chips, which temporarily hold data and help computer processors run multiple programs simultaneously, lost a combined $12.5 billion in the past two years, the most ever, according to Gartner Inc. analyst Andrew Norwood in London.

Inotera plans to diversify into non-dynamic random-access memory chip making after next year to reduce its exposure to the “volatile” DRAM business, Kau said.

The company also plans to cut production costs by upgrading facilities to the 50-nanometer process from its current 70- nanometer technology and to raise its average selling price by focusing on making more expensive chips, Kau said.

Advanced Chips

The company plans to spend $1.6 billion and take 1 1/2 years to complete the technology, Kau said. By the end of next year, Inotera will make the so-called DDR3 chips using the 50-nanometer process, he said.

At present, 90 percent of the company’s output is DDR2 chips, which are priced at $1.08 each, while the balance are the DDR3 semiconductors that sell for $1.62 each on average, according to Dramexchange.

A nanometer is one billionth of a meter and measures the size of transistors within a chip. A lower nanometer count allows more transistors per chip and allows for higher-performance, more-efficient semiconductors to be made.

“By the end of next year, we will make the most advanced chips with the lowest production costs,” Kau said.

Inotera’s first-quarter loss widened to NT$5.32 billion ($162 million) from a loss of NT$4.18 million a year earlier, the chipmaker said in April. Kau declined to forecast when the company will turn a profit.

By: DocMemory
Copyright © 2023 CST, Inc. All Rights Reserved