Elpida Memory Inc., a major maker of computer memory chips, said Monday it has nearly halved its net profit forecast for the year through March, blaming weak digital camera and DVD recorder sales.
The chip maker's announcement underscored the digital electronics market decline that has been observed in recent months.
Last week, Sony Corp. revised its fiscal 2004 outlook after slashing its forecast operating profit by 50 billion yen to 110 billion yen, citing worse-than-expected price falls.
Elpida said it expects net profit to come in at between 12 billion yen and 16 billion yen, compared with 21.6 billion yen projected in November. Expectations for sales were also reduced, and are now forecast at between 211 billion yen and 214 billion yen, compared with an earlier forecast of 220 billion yen.
Dynamic random access memory, or DRAM, is one of the most commonly used memory chips and can be found in just about every digital device, including personal computers and servers. Therefore, the performance of the digital electronics market has a direct impact on the chip maker's fortunes.
"There have been inventory buildups in digital TVs, DVD (recorders) and digital cameras," Yukio Sakamoto, Elpida chief executive, told a news conference. Sakamoto said the excess inventory would be cleared by the end of the month.
As for its outlook for the 2005 DRAM market, Sakamoto is optimistic despite widespread concerns with oversupply, and said the drop in prices of made-to-order DRAMs will probably be limited.
Elpida was established in 1999 as a joint venture between NEC Corp. and Hitachi Ltd. to produce DRAMs. It went public in November.