Elpida turns 1st operating profit in 8 qtrs

TOKYO, JAPAN: Japanese PC memory chipmaker Elpida Memory Inc said on Thursday it earned its first operating profit in eight quarters on a recovery in DRAM prices, sending its shares up 5 per cent.

Elpida, which competes with bigger South Korean rivals Samsung Electronics Co and Hynix Semiconductor, said it expects to report a 500 million yen ($5.6 million) operating profit for July-September compared with a 24.5 billion yen loss in the previous year.

Spot prices of dynamic random-access memory are now more than double what they were a year ago, according to research firm inSpectrum, as demand rises for cutting-edge chips for servers and high-performance computers, causing temporary shortages as suppliers scramble to shift production to advanced DDR3-chips from DDR2-type DRAM.

Elpida, which is vying with U.S. chipmaker Micron Technology Inc to be the world's No.3 maker of DRAM, said its net loss narrowed in the quarter just ended to 8 billion yen from the 31.9 billion yen loss a year earlier.

Japan's sole maker of DRAM, forced by its cumulative losses to raise capital twice this year and seek public aid, logged a 15.5 per cent fall in sales compared with the previous year, as the yen strengthened and competition lowered its prices.

But it was able to make up for the sales fall by making smaller and more cost-efficient chips, spokesman Hieki Saito said.

Taiwan-based Rexchip Electronics Corp, 64 per cent owned by Elpida and 34 per cent by Powerchip Semiconductor, made its first profit in five quarters in July-September after switching to smaller circuitry, Elpida said last week.

Packing more transistors makes chips smaller and more powerful, and allows chipmakers to raise output from each silicon wafer, lowering per-chip costs.

Elpida's shares were up 5 per cent at 1,285 yen, approaching a four-week high and outperforming Tokyo's electrical machinery index's 2.2 per cent rise. ($1=89.32 Yen)