UPDATE 1-Nanya Tech posts Q4 loss, but recovery under way

(Recasts with details)

By Baker Li

TAOYUAN, Taiwan Jan 22 (Reuters) - Nanya Technology Corp (2408.TW), Taiwan's No.2 DRAM maker, posted a wider-than-expected loss in the fourth quarter -- its third consecutive quarterly loss -- due to a steeper-than-forecast fall in chip prices.

But it said chip prices had shown signs of stabilising and supply would be tight in the second half of this year after corporate personal computer replacement kicked in, boosting chip prices and helping it to return to profit.

"Fourth-quarter chip prices slumped 75 percent from a year ago and that was worse than many people had expected," Nanya Technology Vice President Pai Pei-lin told reporters before an investor conference.

"But ASPs (average selling prices) in Q1 are a bit better and will improve slightly in Q2 and then start to pick up in Q3," Pai said. "We are optimistic on the second half."

Sector leader Samsung Electronics (005930.KS) has said it expected a global oversupply of computer chips and lower prices to last through the first half, but market conditions should change dramatically in the second half when demand picks up.

"We think DRAM pricing will stay flattish in the first quarter of 2008, turning up by the second quarter and sequentially improving in the second half, giving a full-year 2008 price decline of 30 percent year on year," Morgan Stanley analyst Frank Wang said in a research note last week.

DRAM prices slumped 85 to 90 percent in 2007, Wang said.

Nanya Tech's bit output will likely grow around 15 percent in the first quarter from the previous three months. Its 2008 bit growth will be around 80 percent.

Nanya Technology, which makes dynamic random access memory (DRAM) chips mainly for PCs, made a net loss of T$8.17 billion ($252 million) in the October-December quarter, compared with a year-ago profit of T$6.5 billion.

The loss was wider than the third-quarter's T$1.66 billion loss. Nanya Technology had been expected to post a loss of T$3.81 billion in the last quarter of 2007, according to the latest forecast from Reuters Estimates.

The results came after the Taipei stock market closed on Tuesday. Shares of Nanya Technology slid 6.5 percent to T$17.40, in line with the main TAIEX's .TWII slump, following a global sell-off.

Shares of bigger local rival Powerchip Semiconductor Corp (5346.TWO), whose quarterly earnings results are due out next week, plunged 6.8 percent to their daily limit.

Inotera Memories Inc (3474.TW), Nanya's joint venture with Germany's Qimonda QI.N, made a net loss of T$3.66 billion in the fourth quarter, reversing T$443 million profit it made in the third quarter, Inotera also said on Tuesday. (US$1=T$32.3) (Reporting by Baker Li, Editing by Anne Marie Roantree)