Macronix International, a supplier of mask ROM and flash memory, expects its sales to hit the lowest levels for 2018 in the second quarter.

The second quarter is usually Macronix' off-season during a year, said company chairman Miin Wu at an April 26 investors meeting. The company's ROM sales will be weak on seasonality during the second quarter, whereas its NOR flash segment will perform relatively well, according to Wu.

Macronix will see its second-quarter revenues decrease only slightly on quarter, as stable growth in the company's product ASPs will offset seasonal weakness in sales, Wu indicated.

Macronix is putting increased focus on high-density NOR flash products to mitigate the impact of its fellow China-based rivals' output expansion in the low-density market segment, Wu noted. The supply of high-density NOR flash chips is expected to remain tight throughout 2018, Wu said.

Macronix is also engaged in the SLC NAND flash memory market, which will see supply fall short of demand in 2018, Wu indicated. The company expects its SLC NAND flash ASPs to register steady growth this year, Wu added.

In addition, Macronix' net inventory exceeded NT$10 billion (US$337.5 million) reaching about NT$11.23 billion in the first quarter of 2018. The company will continue to scale up its inventory level in preparation for robust customer demand during the peak season, Wu said.

As high as 80% of Macronix' stockpiles are related to orders from its biggest customer Nintendo, market observers believe.

Macronix reported net profits hiked 829% from a year earlier but fell 27% sequentially to NT$1.88 billion in the first quarter of 2018, with EPS reaching NT$1.06. The company generated revenues of NT$9.06 billion in the quarter, down 14% on quarter but up 37% on year.

Despite falling shipments of SLC NAND flash chips, overall sales of the company's NAND flash products registered increases of 10% sequentially and 236% on year in the first quarter of 2018 thanks to rising product ASPs.

SLC NAND chips will play a major driver of Macronix' revenue growth in 2018, according to Wu.

Sales of Macronix' NOR flash chips dropped 21% sequentially but grew 5% from a year ago in the first quarter of 2018, while sales of the company's ROM products declined 21% on quarter but increased 33% on year.

NOR flash memory accounted for 44% of Macronix' total revenues in the first quarter, followed by NAND flash chips with 26% and ROM products with 22%.

Macronix' gross margin came to 42% in the first quarter, down 1pp sequentially but up 15pp from the same period in 2017.