AWSJ:Taiwan Nanya Tech Exec:Chips Prices May Rebound Oct
By Terho Uimonen
TAOYUAN, Taiwan (Dow Jones)--Pricing for memory chips used in personal computers and other electronics equipment could rebound as soon as October, as signs are that demand is firming up ahead of an expected seasonal sales uptick, said a senior executive at Nanya Technology Corp. (Q.NYT).
The second half of the year traditionally has seen an uptick in demand as personal computer sales pick up in the back-to-school period and the holiday season. So far, the increase in demand is mainly coming from independent memory module makers, said Charles Kau, executive vice president of strategic marketing and global sales at Nanya Technology.
"We are seeing a significant increase in demand from customers, mainly module makers," Kau said in an interview with The Asian Wall Street Journal.
Still, with the exception of Dell Computer Corp. (DELL), demand from major PC makers, such as Compaq Computer Corp. (CPQ) and International Business Machines Corp. (IBM), "is not strong at all," he added.
Most makers, including Nanya Technology, are currently selling the chips at below cost.
Nanya Technology is one of Taiwan's largest makers of dynamic random access memory, or DRAM, chips. Prices for the chips have fallen by roughly 90% from a year ago, making 2001 the worst year for the industry, according to market researcher Gartner Inc. (ITB).
The company currently sells most of its DRAMs on the spot market, but Kau said the company's goal is to raise the share of sales to major contract customers, such as Compaq, Dell and IBM, to as much as 30% by year-end.
Unfazed by the plummeting prices, the company is aggressively expanding output, with the goal of becoming the world's fifth largest DRAM maker by the end of 2002 - even as it currently loses money on each additional chip it sells.
On the Asian spot market, 128-megabit DRAMs are selling around US$1.50 each, and would need to soar to $2.80 for Nanya Technology to reach break even, Kau said.
Yet, he remains cautiously optimistic that pricing will rebound sooner rather than later, and said a recovery could take place as soon as October.
Demand for faster versions of the chips, called double-data-rate synchronous DRAM, is increasing quite rapidly, Kau said. Spot-market pricing for 128-megabit DDR SDRAM chips is hovering around $1.90 each, he added.
Intel Corp (Singapore: INTC.SI - news). (INTC) early next year is expected to introduce a chip set that will allow the Pentium 4 processor to be paired with the faster memory chips, while rival Via Technologies Inc. (Q.VIA), of Taiwan, earlier this week unveiled its first version of a similar chip set. |
