TOKYO Elpida Memory Inc. has warned it will not meet projected guidance for fiscal 2004 ending March 2005 due to slumping DRAM sales for digital consumer electronics and mobile phones in Japan.
Last November, Elpida (Tokyo) forecasted sales of ¥220 billion (about $2.2 billion) and an operating profit of 26.5 billion yen (about $260 million) for fiscal 2004. The company's revised forecast projects sales of ¥211 billion to ¥214 billion ($2 billion to $2.1 billion) and a profit of ¥18 billion to ¥22 billion ($176 million to $216 million).
Since its formation in 1999, Elpida has operated at a deficit, but reported a profit for the first time in its fourth 2003 fiscal quarter ended March 2004. Since then, the company has raised its ratio of operating profit to sales from 7 percent the first quarter of fiscal 2004 to 10 percent the second and third quarters.
For fiscal 2004 ending March, Elpida targeted a 12 percent profit margin, but now expects margins of only 9 to 10 percent.
"It is the fact that we failed to achieve the target, but as a semiconductor company, a 10 percent profit margin is a high level result," said Yukio Sakamoto, president and chief executive of Elpida.
Elpida expects the DRAM market to grow 45 to 50 percent in bit size and 7 to 10 percent in revenue in calendar 2005.
Because the transition to 90nm processes has not been smooth, Elpida expects DRAM supply to tighten this year. As a result, the company plans to hasten its shift to 90nm processes, producing the first 90-nm part in the first fiscal 2005 quarter ending June.
"The real outcome will be decided by 90 nm and beyond," said Sakamoto.