Elan Microelectronics shares plunge on weak guidance, contract penaltyBy Lisa Wang / Staff reporterShares of Elan Microelectronics Corp (義隆電子) yesterday tumbled 4.22 percent after the chip designer gave a gloomy financial forecast for this quarter given weaker-than-expected demand for notebook computers and penalties for not exercising a contract signed with its chip supplier. As customer demand has weakened significantly, Elan said it opted not to honor a three-year chip supply agreement with a foundry service provider, making it the nation’s first chip designer to default on a chip supply contract. “Our orders from Chromebook makers are only half of that last year.”As customer demand dipped, Elan chose to default on the supply contract and book the full penalty this quarter, Yeh said. “All of our product lines have shown weak momentum in the fourth quarter compared with the third quarter,” he said. Last quarter, Elan reported that net profit contracted 33 percent to NT$522 million from NT$784 million in the third quarter.
