DRAM stocks up on product price hikes
CNATAIPEI -- Shares of local dynamic random access memory (DRAM) chip makers moved higher Tuesday morning after the average price of the benchmark DDR3 2Gb chip hit a 30-month high on Monday, dealers said.
September 18, 2013, 12:11 am TWN
Product prices have turned higher because of the partial suspension of production at the Chinese factory of the world's second largest DRAM maker, SK Hynix Inc., due to a fire.
Rising demand for the electronic gadgets that use DRAMs ahead of the Oct. 1 National Day holiday have raised hopes that product prices will increase further, they said.
Based on the uptrend, many investors expect Nanya Technology Corp. and Inotera Memories Inc. will remain profitable in the third quarter and even see their bottom lines improve, dealers added.
In yesterday's trading, shares of Nanya Technology closed flat at NT$4.60, with 6.11 million shares changing hands, while shares of Inotera had risen 0.95 percent to NT$15.95 on trading volume of 11.93 million shares.
The weighted index on the Taiwan Stock Exchange was down 0.06 percent at 8,249.78.
“Many investors are simply buying local DRAM stocks amid rising optimism toward their pricing power at a time when supply is becoming tighter than ever,” KGI Securities analyst Eason Lee said.
According to DRAMeXchange, a Taipei-based DRAM market research group, the average price of the benchmark DDR3 2Gb chip rose to US$2.166 Monday, hitting its highest level in almost 31 months.
DRAM prices have spiked since a fire engulfed Hynix's plant in Wuxi on Sept. 4, causing a partial suspension of the South Korean company's operations in China, dealers said.
In the second quarter, Hynix accounted for almost 30 percent of the world's DRAM sales, only behind Samsung Electronics Co.'s 32.7 percent. The Wuxi plant accounted for about 50 percent of Hynix's total production.
DRAM Price Hike Continues in October
“The impact of Hynix's fire could continue into October and push DRAM prices up further,” Lee said. “In addition, Chinese buyers have started rebuilding their inventories in a bid to meet strong demand during the Oct. 1 National Day holiday.”
Lee said Micron Technology Inc., the world's third largest DRAM supplier, has reportedly been shifting about 30 percent of its capacity to NAND flash memory production, which could further hurt commodity DRAM supply.
“The tight DRAM supply is likely to continue for the rest of this year. I think Nanya Technology and Inotera will make more money in the second half of the year,” said Lee, who did not offer forecasts for the two DRAM makers' earnings.
In the second quarter, Inotera posted NT$3.47 billion in net profit, or NT$0.62 in earnings per share (EPS), compared with a net loss of NT$613 million, or NT$0.11 in loss per share, reported for the first quarter.
In the same three-month period, Nanya Technology posted NT$1.68 billion in net profit, or NT$0.07 in EPS, compared with NT$526 million in net profit or NT$0.02 per share a quarter earlier.