Nanya Technology Corp (“옱‰È‹Z), Taiwan's biggest DRAM chipmaker, yesterday posted its weakest first-quarter net profit in about three years, as losses from a DRAM venture and unfavorable foreign exchange rates exacerbated stagnant demand.

Net profits edged 1.1 percent lower to NT$1.85 billion (US$57.12 million) last quarter, from NT$1.87 billion the previous quarter. That meant an annual decline of 70.6 percent from NT$6.29 billion.

However, gross margin improved to 32.7 percent last quarter from 29.8 percent the previous quarter, buckling an industrial downtrend. Profit margin also jumped to 25.3 percent from 18 percent during the same period.

Last quarterfs figure was dragged down by non-operating losses of NT$778 million, primarily stemming from losses of NT$379 million from Inotera Memories Inc (‰Ø˜±‰È‹Z), which is 24 percent owned by Nanya, as well as foreign-exchange losses of NT$260 million.

Inotera swung into quarterly losses of NT$1.56 billion in the first quarter.

Nanya has signed an agreement with Inoterafs major shareholder, Micron Technology Inc, to divest its investment entirely for NT$19.9 billion. The transaction is expected to be completed in July and Nanya is likely to book the gain for its third-quarter financial statement.

Nanya president Lee Pei-ing (—›”|‰l) expects Inoterafs losses to improve this quarter, benefiting from cost improvement after converting its capacities to cost-effective 20-nanometer chips this quarter.

Overall, DRAM industry fundamentals are improving too as inventories on supply chains are falling and oversupply is being alleviated, Lee said.

gPrice pressure on commodity PC DRAM chip remains, but price decline is decelerating,h Lee said.

He expects prices to fall at a sequential rate of 5 percent in the current quarter.

gWe hope to retain gross margin this quarter [at the same level as last quarter],h Lee said.

PC DRAM chips made up less than 10 percent of Nanyafs revenue last quarter.

The company expects wafer shipments to be flat this quarter compared with last quarter.

However, wafer shipments are expected to grow 10 percent annually, due to technology conversion.

Lee said that he is even more optimistic about the second half of this year.

gThe second half of this year will be a better period than the first half as international sports events such as the Olympic Games will help boost demand,h he said.

New smartphones tend to be equipped with more DRAM content, which should also help increase demand, Lee said, adding that demand for server DRAM chips should remain stable.

Lee said that he expects demand and supply to approach parity in the third and fourth quarters as the worldfs major DRAM chip suppliers trim capital spending and slow capacity expansion.

Nanya has budgeted NT$25.25 billion for this yearfs capital spending, with most of the investment for next-generation 20-nanometer technology.

By: DocMemory
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