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Nanya Reports Unexpected Loss After Chip Prices Fall

Oct. 20 (Bloomberg) -- Nanya Technology Corp. posted an unexpected third consecutive quarterly loss as slowing computer demand drove down prices, prompting Taiwan’s second-largest memory-chip maker to cut its projection for full-year shipments.

The third-quarter net loss was NT$2.27 billion ($73.5 million), compared with NT$3.9 billion a year earlier, the Taoyuan, Taiwan-based company said in a statement today. The average of analyst estimates compiled by Bloomberg was for profit of NT$970 million. Inotera Memories Inc., Nanya’s venture with Micron Technology Inc., posted a loss of NT$2.6 billion.

Prices of memory chips, used to help computers run multiple programs simultaneously, dropped an average 15 percent in the quarter from the preceding three-month period because of lower-than-expected global demand for computers, Nanya said. Slowing demand and oversupply could lead prices lower this quarter, according to industry researcher DRAMeXchange.

“With the coming slow season and output increase from DRAM vendors, over-supply conditions will be serious,” DRAMeXchange wrote in an Oct. 15 statement. Chip prices will likely reach “bottom” at the end of the first quarter or early second quarter, according to the statement.

Full-Year Shipments

Nanya’s full-year shipments, measured in bits, will climb 25 percent this year, compared with an earlier estimate of 35 percent, the company said in a statement. Third-quarter sales climbed 30 percent from a year earlier to NT$14.9 billion.

Costs for research and development more than doubled from a year earlier to NT$1.8 billion after Nanya hired more engineers and spent money on testing its latest 42-nanometer production process, Vice President Pai Pei-lin said at a briefing today.

Nanya climbed 4.8 percent to close at NT$18.75 in Taipei trading before the earnings announcement. The stock has declined 43 percent this year compared with a 0.8 percent drop for the benchmark Taiex index.

Inotera had so-called idle costs of NT$3.5 billion for the quarter as it continues to switch its factories to a new technology, President Charles Kau said today. Shipments, measured in bits, will climb as much as 80 percent this quarter from the prior period, after it completes the production transition this month, Inotera said in a statement.

Powerchip Technology Corp., Taiwan’s largest memory-chip maker, on Oct. 18 reported third-quarter net income of NT$1.94 billion, missing the NT$3.3 billion average of three analyst estimates compiled by Bloomberg.

The chipmaker priced an offering of 600 million new shares at NT$16.50 each, Nanya said in an Oct. 15 filing.

To contact the reporter on this story: Tim Culpan in Taipei at tculpan1@bloomberg.net.

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net.

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