03.07.2001
Powerchip to disappoint on February and March revenue

• Powerchip (5346 'Li Jing') said in an analysts meeting yesterday that February and March revenue will see a sequential decline from January's NT$1.6b. The forecast is in line with falling revenue in the DRAM sector due to DRAM spot price weakness.

• Among local DRAM makers, Powerchip maintains the highest yield rate on current 0.18um technology and the lowest die cost, surpassing Winbond (2344 'Hua Bang Dian'), ProMOS (5387 'Mao De') and Vanguard (5347 'Shi Jie'). It expects to cut into 0.16um in 3Q01.

• Compared to Winbond and ProMOS, Powerchip's first break in 0.18um generation technology came late in 2H00. The company attributes its current cost leadership to Mitsubishi's 0.18um design. Powerchip has yet to prove its capability in sustaining leadership on 0.16um, as other players are gradually catching up on yield management.

• Powerchip is respectively trading at 10% and 30% valuation discounts compared to Winbond and ProMOS in terms of P/B and P/S multiples. Going forward, we believe the company can report better earnings in 1Q01 and 2Q01 than local competitors, closing the valuation gap.

LindaLiu@Primasia.com +886-[0]2-2547-8867