Winbond Electronics Corporation Announces Financial Results for the First Half of 2001

[Taipei News] Winbond Electronics Corporation today announced the results from its board of directors meeting held July 31, 2001. The board of directors met and approved the Company's financial report for the first half of 2001; which as been audited by a CPA. Total revenue for the first half of 2001 was NT $13.261 billion; with an after tax loss of NT $2.559 billion. Net profit per share was reported at a lost of negative NT $0.58. Winbond attributes its less than ideal financial results to the global downturn in the semiconductor business and the economic recession in the United States which have adversely impacted business since the fourth quarter of last year.

The pricing of DRAM continued to decline throughout the first half of 2001. Therefore, excess inventory and DRAM pricing were both negative influences on the Company's financial results. In addition, due to on-going new product development for emerging and high growth markets, R&D expenses in the first half of the year were higher than usual. In keeping with standard accounting practices, the Company reported a loss for the first half of the year. However, Winbond's long-term financial strategy continues to be conservative; the Company has no short-term bank loans and maintains a low equity-to-loan ratio and a healthy reserve of liquid assets. Overall, Winbond's financial status remains very healthy.

Currently, Winbond continues to focus on driving down manufacturing costs for Fabs 4 and 5. The Company has already reduced costs nearly 50 percent in the second quarter of 2001 when compared with same period last year. Winbond achieved this milestone by gradually transitioning the majority of its DRAM production to a 0.175-micron process (equal to 0.16 micron process).This enabled the Company to compete more effectively in the marketplace. However, the drop in DRAM pricing has continued at such a rapid rate that the trend ended up offsetting the cost benefits realized by decreased manufacturing costs and production yield improvements.

Recently, Winbond announced that it has signed a Fast Cycle Random Access Memory (FCRAM) technology transfer agreement with Fujitsu Limited, a major Japanese semiconductor manufacturer.In the agreement, Fujitsu Limited licensed its 32M 1T Pseudo SRAM technology to Winbond. In turn, Winbond agreed to provide product fabrication services to Fujitsu Limited in support of its high growth FCRAM products. Winbond is the first FCRAM licensee in Taiwan and expects to ramp up for volume production of the product in first quarter of next year.

During the second quarter of 2001, Winbond's Logic Product Business Group experienced solid growth when compared to the first quarter. This was due to relatively stable pricing in the marketplace and an increase in demand. Therefore, in contrast to the overall condition of the semiconductor market, business for Winbond's logic products has been relatively stable. The Logic Product Business Group's healthy revenues helped to offset financial difficulties encountered in the DRAM market. In the future, Winbond will continue to focus more effort and resources on developing and marketing ICs for high growth markets including digital consumer ICs, non-volatile memory chips, flash memory products, multimedia ICs, video conference and network applications. The Company's long-term strategy of providing,"System-On-a-Chip" products gives customers comprehensive IC solutions that should enable the Company to grow its business.

    Wilson Wen
    Vice President of Administrative Center

News Liaison
    Mike Liu
    Deputy Director

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