Elpida sees higher DRAM price in Jan-Mar

By Kiyoshi Takenaka

Hong Kong (Reuters) - Japan's Elpida Memory Inc. (6665.T: Quote, Profile, Research, Stock Buzz) said on Wednesday the price of its DRAM chips for the current quarter is likely to be stable to firmer from the previous quarter, reversing its earlier outlook for a 10-15 percent decline.

Elpida, the world's fifth-largest dynamic random access memory (DRAM) chip maker, also said its earnings forecasts for January-March were conservative and hoped to exceed the existing outlook. DRAMS are used mostly in personal computers.

Elpida said earlier this year its operating profit for the January-March quarter would likely come in a range between 500 million yen ($4.32 million) and 4.5 billion yen.

"Demand in the first quarter is getting stronger especially for DDR2 DRAM in the PC market," Toshiharu Namimatsu, president of Elpida Memory's Hong Kong operations, said at the Reuters Global Technology, Media and Telecoms Summit.

"So, we are quite confident that our average selling price will at least stay unchanged from the previous quarter or even more than that."

He said contract prices for March are likely to be even higher than in February.

Spot DRAM prices have been firming in recent months as memory chip makers such as Hynix Semiconductor Inc. (000660.KS: Quote, Profile, Research, Stock Buzz) shifted their production capacity to hot-selling NAND flash from DRAM chips.

Shares in Elpida, owned 20 percent by electronics conglomerate Hitachi Ltd. (6501.T: Quote, Profile, Research, Stock Buzz) and 14 percent by NEC Corp. (6701.T: Quote, Profile, Research, Stock Buzz), rose 1.64 percent to close at 4,340 yen on the Reuters news, beating the Tokyo stock market's electrical machinery index , which fell 1.7 percent.

Despite strong growth outlook for NAND flash memory, widely used in digital cameras and portable music players such as Apple Computer Inc.'s (AAPL.O: Quote, Profile, Research, Stock Buzz) iPod nano, Elpida has no intention of making NAND flash for the next two years, Elpida Chief Technology Officer Takao Adachi told Reuters.

"We are focused on DRAM. Just now we have no plan for flash," he said.

For the business year ending March 31, Elpida is likely to be able to hit the upper end of its existing earnings outlook if the DRAM market remains firm, Namimatsu said.

Elpida said in January its full-year earnings at the operating level are expected to be somewhere between a 4 billion yen loss and a break-even.

"If the current market conditions are kept unchanged by the end of March, we'll reach somewhere near the break-even point," Namimatsu said.

Elpida held a 7.1 percent share in the $25 billion global DRAM market in 2005, following Samsung Electronics Co. Ltd. (005930.KS: Quote, Profile, Research, Stock Buzz), Hynix Semiconductor Inc. (000660.KS: Quote, Profile, Research, Stock Buzz), Micron Technology Inc. (MU.N: Quote, Profile, Research, Stock Buzz) and Infineon Technologies (IFXGn.DE: Quote, Profile, Research, Stock Buzz), according to data from research firm Gartner.

Among the top five makers, Elpida is the only company that posted DRAM revenue growth in 2005 as it has been aggressively expanding its capacity to process cost-efficient 300-mm wafers.