Forex gains give Nanya’s Q2 net income a lift

UNCERTAINTIES:
The DRAM chipmaker expects a tough quarter ahead amid surging inflation and questions about Chinese production resumption

• By Lisa Wang / Staff reporter

DRAM chipmaker Nanya Technology Corp (南亞科技) yesterday reported that net profit inched up 0.4 percent last quarter, as foreign-exchange gains helped cushion the effect of flagging consumer electronics demand amid high inflation and COVID-19 lockdowns in China.

Net profit rose to NT$6.57 billion (US$220.3 million) from NT$6.55 billion in the first quarter, or earnings per share of NT$2.12 from NT$2.11 in the previous quarter.

While operating income last quarter contracted 14.3 percent sequentially to NT$5.36 billion, net income grew mainly due to non-operating income of NT$1.74 billion, more than half of which came from foreign-exchange gains, the company said.

Photo: Grace Hung, Taipei Times

Nanya Technology expects a rough quarter ahead amid increasing inflation worldwide and flagging consumer confidence, as well as uncertainty about production resumption in China.

China’s “zero COVID” policy has severely affected consumer spending in the world’s biggest economy and rippled through electronic supply chains there, Nanya Technology said.

“The third quarter will be a challenging period. The third quarter is usually a high season, but this year, it is unclear whether there would be a seasonal effect,” Nanya Technology president Lee Pei-ing (李培瑛) told an online news briefing yesterday.

“Demand for [DRAM] is dwindling in the short term,” Lee said.

Weak demand for DRAM chips for consumer electronics, mainly smartphones and notebook computers, would ultimately spread to memory chips used in servers, as people turn conservative about most products due to macroeconomic uncertainties, he said.

Any recovery in DRAM chip demand would hinge on improvements in global inflation, production resumption in China and economic stimulus measures from governments around the world, Lee said.

The average selling price is expected to dip further this quarter following a mid-single-digit percentage sequential decline last quarter on lingering impact from global inflation as Russia’s invasion of Ukraine led to surges in crude oil and natural gas prices, Lee said.

Gross margin is also under mounting pressure and likely to trend down this quarter from 44.1 percent in the quarter ending June 30, due to rising costs of raw materials, manufacturing equipment and electricity rate hikes of 15 percent, Lee said.

Foreign-exchange gains lifted gross margin by 0.2 percentage points last quarter from 43.9 percent in the first quarter, Lee said, but added that it is hard to predict how the market would move this quarter.

Major memorychip inventories rose last quarter and could continue rising in the second half of the year given an unfavorable external environment, he said.

Nanya Technology said it was sticking to its planned capital expenditure of NT$28.4 billion for this year, but delays in equipment delivery might trim the spending by about 10 percent.