PowerChip of Taiwan the Only Profitable DRAM Maker

Oct 25, 2010 Ι Industry In-Focus Ι Electronics and Computers Ι By Ken Liu, CENS
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Taipei, Oct. 25, 2010 (CENS)--PowerChip Semiconductor Corp. (PSC) posted NT$12.2 billion (US$394 million) in after-tax net income, or NT$2.22 per share, throughout the first three quarters, with the net income for the last quarter alone amounting to NT$1.9 billion (US$62 million), or NT$0.34 per share.

The earnings results make PSC the only profitable dynamic random access memory (DRAM) chipmaker in Taiwan. Nanya Technology Corp. and Inotera Memory Inc. had accumulated losses estimated at NT$1.2 and NT$1.4 per share, respectively, as of the end of last quarter.

In the last quarter alone, PSC's non consolidated gross profit and gross margin rate were NT$4.3 billion (US$140 million) and 17.35%, respectively. In the meantime, its net operating margin was 12.89% and its pre-tax earnings totaled NT$2.2 billion (US$73 million).

Throughout the first three quarters, the company had total sales of NT$67.5 billion (US$2.1 billion), with sales for last quarter alone totaling NT$25 billion (US$807 million). In August alone, the company had sales of NT$8.8 billion (US$286 million), its best month in 41 months. The August result represented a 2.36-fold growth from the same month of last year.

PSC executives ascribed the hefty growth mostly to the company's smooth migration to 63nm process, which has considerably helped cut down the company's costs while boosting output.

Nanya and Inotera, both held by the Formosa Plastics Group (FPG), did not switch to the efficient process technology as smoothly as PSC last quarter. Besides, a slumping market has further worsened the two companies' loss.

Industry watchers are still pessimistic toward the island's DRAM market in light of persistent collapsing DRAM prices, estimated to drop from US$2 per unit to US$1 at yearend.

However, PSC Chairman Frank Huang said his company would remain profitable into this quarter and would begin to deploy 45nm process next quarter to further drive down costs.