Japan news: TEL, Elpida anticipate losses

Apr. 11, 2008 – Elpida memory expects a ¥20B (US $197.7M) group operating loss for the just-ended fiscal year, vs. a ¥68.4B ($676.0B) profit in the prior year, the company’s first such loss since its market listing in late 2004, notes the Nikkei daily. Sales are expected to have declined about 18% to ¥400B ($3.95B), with higher volumes unable to offset falling unit prices.

Still, the paper notes, Elpida probably isn’t feeling as much pain as others in the market, where >$1 ASPs are far below breakeven prices ($2-$2.50) for mainline product. The company has better a better manufacturing cost structure because DRAMs are all made at its cutting edge facilities, as of earlier this year — Qimonda, on the other hand, is “saddled with old facilities” and posted a 4Q07 operating loss exceeding sales, the paper notes. And smaller players are being pressed to change by the tight market conditions, the Nikkei noted — e.g. Taiwan’s Nanya is switching its alliance from Qimonda to joint production with Micron.

Meanwhile, Tokyo Electron Ltd.’s groupwide orders in fiscal 4Q08 for semiconductor equipment were their lowest level in nearly three years, at ¥100B ($988.4B), down 29% vs. the prior quarter and more than 50% vs. a year earlier, due to investment hesitation by Asian chipmakers, noted the Nikkei daily. Though the company appears to have posted a record profit for the just-finished fiscal year, it’s faced with declining sales and profits in the new fiscal year, as DRAM makers become reluctant to invest in capacity, and NAND chip demand isn’t strong enough to offset that decline.

The company’s LCD equipment business is doing well, though, with record fiscal 4Q08 orders of ¥~60B ($593.0M). That softened the blow for total companywide orders, which were down 19% Q-Q to ¥160B ($1.58B).


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