Macronix International Co Ltd’s (旺宏電子) first-quarter net profit plummeted 71 percent as the strong New Taiwan dollar eroded margins and offset growth in demand, the world’s No. 1 NOR flash memorychip maker said yesterday.
Net profits were NT$203 million (US$6.73 million), compared with NT$703 million in the fourth quarter of last year, but on an annual basis it was an improvement from the loss of NT$890 million posted for the same period last year.
Gross margin fell to 27 percent from 32 percent in the fourth quarter last year, compared with 15 percent a year earlier, the company’s financial statement showed.
“We would have made similar profits as we did in the fourth quarter [of last year,] if the NT dollar had stayed at the same level [against US dollar] as in the fourth quarter,” chairman Miin Wu (吳敏求) said.
The volatility in foreign exchange rates reduced the company’s pre-tax profit by NT$400 million, Wu said.
A short supply of NOR flash memory chips and a spike in ROM chip demand — primarily for Nintendo Co’s new Switch game console — had helped boost orders and prices during the first quarter, bucking a seasonal weakness, Macronix said.
As growth in demand continues to outstrip supply expansion, Macronix expects price increases to be steeper this quarter and next compared with the first quarter, Wu said.
However, he declined to provide details about the potential price hikes.
“Due to strong demand and limited supply, we have to allocate our capacity for each client while price is on an upward trend,” Wu said.
There is increasing demand for NOR flash memory chips from all density products and all applicants, he said.
Based on current order visibility, Macronix might see its profits improve on a quarterly basis this year, to make the year a profitable one, he said.
NOR flash memory chips are the biggest revenue contributor for Macronix, with a 58 percent share last quarter. ROM chips are next with a 23 percent share.
Macronix’s board has approved the allocation of an additional NT$667 million for capacity expansion this year, which is expected to bring this year’s capital spending to NT$3 billion, triple last year’s NT$900 million.
“Clients are still knocking on our doors” for more supplies, Wu said.
“They are snatching at low-density NOR [flash memory chips] used in such applications as Internet-of-Things and handheld devices because those chips have become red-hot due to fewer suppliers,” Wu said.
Maintaining a book value of more than NT$5 per share last quarter for a second consecutive quarter, has given the company greater confidence about the removal of margin trading curbs imposed by government regulators in May last year, it said.
Macronix shares yesterday fell 0.37 percent on the Taiwan Stock Exchange in Taipei to close at NT$13.45.
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