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To: niek who wrote (1076)	1/26/2006 1:45:44 PM
From: niek	Read Replies (1) \| Respond to of 43297

Elpida expects 50 percent bit growth in 06, 300mm fab ramp exceeds target Thursday, 26 January 2006 ImageElpida Memory returned to profitability for its 3Q05 accounting period due to the increased ramp of its 300mm fab E300 and increased production loading on its foundry partner Powerchip Semiconductor (PSC). PSC's contribution had reached 12 percent of sales in the 3Q05 period and would reach 20 percent by the end of 4Q05 accounting period. Also contributing to the improved performance was a faster than expected migration to 90nm technology due to improving yields and a range of production cost savings.Elpida's, E300 fab exceeded ramp projections by around 4,000wspm reaching 54,000wspm by the end of December 2005, which is its official capacity limit. The company reiterated that volume production had begun at E300 Area 2 in October, ramping 90nm DDR2 DRAM technology. The ramp of its 90nm technology is now going better than planned, according to the company with 45 percent of wafers at the end of December being fabricated at that node. The company expects to reach 60 percent crossover by the end of the March 06 quarter and could pass 60,000wspm levels. Our estimates indicate that Elpida's ramp rate is pushing 4,000wspm, up from 2,000wspm earlier last year. The company therefore expects bit growth to increase by 50 percent in 2006. However, Elpida's CEO, Yukio Sakamoto, guided that it would be difficult to remain profitable through to the end of the financial year, as ASP's continued to trend down and the company would be hit with higher costs as E300 Area 2 continued to ramp but had not reached sufficient wafer starts to breakeven. Sakamoto also hinted that the company was struggling to meet customer demand as other memory manufacturers had switched production away from DRAM to NAND Flash. The problems of DDR2 chipset shortages had also been resolved pointing to a first half year supply/demand balance in DRAM markets. However, he cautioned that should capital expenditures increase above stated levels then DRAM could go back to an oversupply situation in the second half of the year.