Elpida Cuts DRAM Production, Might Expand Loss in Q2

Sept 10, 2008 19:14 Masahide Kimura, Nikkei Electronics

Elpida Memory Inc will reduce the amount of production at its Hiroshima Plant by about 10% from mid September, the company announced at its business presentation in Tokyo Sept 9, 2008.

"In light of the current environment surrounding the DRAM market, our supply appears to be 5 to 10% more than the demand," Elpida said.

The company will reduce production of the relatively old line, which supports 90nm generation process technology, among the lines at the Hiroshima Plant. After the market condition recovers, the line will be allotted to foundry production, instead of DRAM, according to Elpida.

Elpida is planning to shift the proportion of DRAM and foundry production at Hiroshima Plant to 1:1 targeting 2011, dedicating the plant to "research and development, mobile DRAM production and foundry" from now on.

Elpida also explained its earnings forecasts for the second quarter (July to September 2008) of fiscal 2008. The company expected sales to remain almost flat from ¥109.2 billion in the first quarter (Q1). Operating loss is also likely to be equivalent to ¥15.6 billion in the Q1 or could be larger, it said.

The company reiterated its policy to aim at stabilizing management of the DRAM and foundry businesses, giving no significant revision to its business plans. Elpida describes its memory business including the foundry business as "DRAM + flash + DRAM like." "DRAM like" products include CMOS image sensors.

Although demand is strong for foundry production of advanced logic chips, Elpida expressed its intention to focus on the memory business first, saying, "It's a little bit of a stretch to develop the logic foundry business and the memory business at the same time."

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