LONDON – Memory chipmaker Elpida Memory Inc. is cutting capital expenditure plans as a slow growing memory market means it will miss previous earnings projections, according to a Bloomberg report which cited company president Yukio Sakamoto as its source.
Operating income may be between 100 billion yen (about $1.2 billion) and 120 billion yen (about $1.45 billion) in the 12 months through March 2011, and sales may range from 600 billion yen (about $7.2 billion) to 650 billion yen (about $7.8 billion), the report quoted Sakamoto as saying. This compares with a profit of 160 billion yen (about $1.9 billion) on annual sales of 700 billion yen (about $8.4 billion) that Sakamoto had previously expected, the report said.
Elpida is therefore delaying plans to boost production capacity at its Taiwanese unit, Rexchip Electronics Corp. (Houli, Taiwan), the report referenced Sakamoto as saying. "Through the summer, demand for PC memory didn't rise as much I had expected. If there's no demand, there's no point in adding capacity," the report quoted Sakamoto as saying.
Elpida had been planning to begin work on a second fab at Rexchip, to be called R2. That decision is now being deferred to June 2011, the report said.
Elpida is now holding capex for the fiscal year at the previously announced 115 billion yen (about $1.38 billion) rather than expanding capex to 150 billion yen (about $1.8 billion), the report said