06.26.2001
Operating losses expected

• Development: Winbond stated during the June 22 investor conference that 2Q01 will see no improvement in operating losses (NT$-1.42bn during 1Q01). The company expects to further divest equity holdings to enhance overall profitability level.

• Analysis: Given the 30% price decline on the benchmark 128Mb SDRAM QoQ in the current quarter, we expect Winbond’s 2Q01 gross margin to drop to 5.7% from 1Q01’s 15%, increasing operating losses to NT$-2bn.

• Primasia View: We remain cautious on surplus in DRAM supply and maintain our L-T BUY recommendation.

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