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Elpida cuts profit forecast due to DRAM decline

Posted: 18 Jan 2006 ?? ?Print Version ?Bookmark and Share

Keywords:Peter Clarke? DRAM? Elpida Memory?

DRAM maker Elpida Memory Inc. has slashed its forecast for profit in the October-December quarter and reduced its sales forecast due to a fall in DRAM chip prices. Elpida said there had been a 25 percent drop in spot market prices for 512Mb DDR chips during the third quarter.

Last week (Jan. 13), Elpida forecasted a group net profit of about $1.4 million for the third quarter, below its previous estimate of a between $8.7 million and $34.8 million. Elpida said it now expects sales of about $510 million, at the lower end of its prior range of between $505 million and $550 million.

"Owing to an 11 percent bit shipment increase and an improved product mix in the third quarter, we now expect net sales for the 3Q to exceed the prior quarter net sales by 1.5 billion yen. In addition, although the start of operations in Area 2 of E300 should enable us to achieve an operating profit in the 3Q for the first time since 4Q FY 2004, we now believe that actual profit results will fall below the forecasted amounts we announced last October. The main reason for this change in profit outlook is that, given an approximate 25 percent drop in spot market prices for 512Mb it DDR2 during the 3Q, our average selling price for DRAMs has suffered a 7 percent decline, which was greater than the maximum 5 percent drop contained in our earlier outlook," the company said in a statement.

The company added that it expects to book an extraordinary profit of about $8.7 million due to the sale of fixed assets.

- Peter Clarke
EE Times

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