Powerchip expects price of chips to rise

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Powerchip, Taiwan’s biggest memory chipmaker, believes that prices for dynamic random access (D-Ram) chips are bottoming out, and that a rebound starting next month would help the company remain profitable.

Brian Shieh, president, said the current commodity price level close to US$2 was “borderline” since it had come close to Powerchip’s cost of manufacturing. But he said that prices were expected to recover to US$2.50-US$2.80 next month, and might rise as high as US$4 in the second half of the year. As Powerchip’s manufacturing cost would drop as low as US$1.80, the company would still be capable of being “very profitable”, he said.

The remarks followed a report of surprisingly strong earnings for the first quarter. The company’s net profit increased by more than 500 per cent over the same period last year to T$7.53bn (US$22.7m).

Sales and profit were down from the fourth quarter last year, due to plummeting D-Ram prices. However, Powerchip’s performance is still stronger than earnings from other chipmakers.

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