WRAPUP 1-Japan’s Elpida Q3 profit up, sees tight supply

* Y21 bln Q3 net profit is first in 9 qtrs, biggest in 3 yrs

* Q4 output to be flat, keeps annual capex plan

* Sees DRAM supply shortage ahead, stable prices

* NEC, Advantest narrow Q3 net loss, eye rising orders
(Adds NEC, Advantest results)

TOKYO, Jan 28 (BestGrowthStock) – Japanese chip maker Elpida Memory
Inc (6665.T: ) said it would keep output flat this quarter as a
surge in DRAM prices helped it post its biggest net profit in
three years, even as its rivals flirt with overcapacity.

Elpida, which received an injection of public money last
year, is scrambling to migrate to advanced chips to keep up with
output hike plans by bigger rivals Samsung Electronics Co
(005930.KS: ) and Hynix Semiconductor Inc (000660.KS: ).

The PC memory maker did not give an outlook, but it said it
expected its output in terms of memory capacity to stay flat or
grow at most by 5 percent in the current quarter, compared with
October-December.

For the full year, however, analysts on average expect Elpida
to report its third year of red ink with a net loss of 9.8
billion yen ($108.5 million), according to a poll of 17 analysts
by Thomson Reuters I/B/E/S.

A recovery in PC demand in emerging nations and corporate IT
spending is prompting big chip makers to invest more and widen
the gap with their smaller rivals, whose capital has been
depleted by more than two years of brutal price falls.

Spot prices of dynamic random access memory have nearly
tripled over the past year, according to market research firm
DRAMexchange.

Elpida sprang back to a net profit of 21.1 billion yen in
October-December from a loss of 72.3 billion yen in the same
period the previous year, thanks to a boost in demand for
advanced DDR3-type chips and a rise in corporate demand.

It logged a record quarterly operating profit of 30.4 billion
yen, up from a loss of 57.9 billion yen the previous year, as
sales more than doubled.

Elpida, which is in a close race with United States chip firm
Micron Technology Inc (MU.O: ) to be the world’s No.3 PC memory
maker, kept its capital spending plan at 60 billion yen for the
year to March.

“We expect the supply shortage to continue this year,” said
Elpida’s Chief Financial Yasuo Shirai at a news conference,
adding that while it was hard to read DRAM prices, they were
likely to remain stable throughout the year to March 2011.

Advantest Corp (6857.T: ), which supplies chip testers to chip
makers such as Intel (INTC.O: ) and Samsung, said it now expects a
annual net loss of 13.5 billion yen, missing a market consensus
for a loss of 7.2 billion yen by 16 analysts.

It narrowed its losses to a quarterly net loss of 5.7 billion
yen from a loss of 7.8 billion yen the previous year.

Advantest, which invested in cash-strapped Elpida last year,
said that it expected new orders to rise almost 30 percent in the
year to March.

It had a backlog of orders worth 18.8 billion yen at the end
of December.

The positive results were largely priced into share prices,
an investor said.

“These positive conditions will continue for a while, but
further gains in their stock prices will depend on whether or not
the U.S. economy would fall into a second trough” and on currency
moves, said Mitsushige Akino, chief fund manager at Ichiyoshi
Investment Management

NEC Corp (6701.T: ), which owns 65 percent of Japanese system
chip maker NEC Electronics Corp (6723.T: ), said its quarterly net
loss of 9.6 billion yen from a quarterly net loss of 130.8
billion yen in the previous year, hurt on PC price falls and
sluggish chip demand.

NEC kept its full-year outlook above market consensus. Its
chip unit, slated to merge with Renesas Technology in April, said
that orders were recovering for chips used in flat TVs, digital
cameras and automobiles.

Shares in Elpida, closed up 5.2 percent prior to the results,
outperforming a 2.7 percent rise in the Tokyo subindex of
electrical machinery stocks (.IELEC.T: ). Advantest rose 2.5
percent while NEC gained 0.4 percent.

Elpida’s shares jumped 22 percent during the quarter just
ended, outperforming a 3 percent rise in the subindex.

Investment

(Reporting by Mayumi Negishi, Additional reporting by Aiko
Hayashi)

WRAPUP 1-Japan’s Elpida Q3 profit up, sees tight supply