Report: Powerchip weathering DRAM prices, pushing 70nm transition

July 7, 2007 – DRAM price plunges will push Powerchip Semiconductor Corp. into the red in 2Q07 with a $91-$106 million loss, but revenues are expected to be better than 1Q, and losses should ease in the next few months as the company moves to 70nm process technologies, according to the Taiwan Economic News.

The report notes that foreign institutional investors are estimating breakeven monthly revenue of $212 million, and 2Q07 sales of $521 million. They project a core-business loss of $121-$136 million, but that includes some part of its holding of Macronix International Co. Ltd.

The company’s last net loss was in 3Q03 ($48 million), and even with all the industry handwringing over DRAM price plunges, projected 2Q net loss will be far off the company’s worst performance in 1Q01 ($145 million) and 4Q01 ($193 million), respectively, the paper noted.

Sales picked up 10% in June vs. May, once DRAM spot prices started to bottom out, execs recently said, and continued DRAM recovery is expected to reflect in more improvements in 3Q. Also helping improve conditions into 3Q07 is Powerchip’s capacity migration to 70nm processes at its Fab 12A and 12B 300mm fabs (combined output of 90,000 wafers/month), which is about 70%-80% complete, though the paper notes different opinions of yield rates — saying the company is touting 75% defect-free rates, while other unnamed sources suggest 50% rates instead.


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