DRAM makers Nanya and Inotera stocks soar on product price hikes

Inotera, in particular, outperformed the DRAM sector after it secured NT$10 billion (US$345 million) in syndicated loans to meet fund demand for its future operations, they said.

As of 11:21 a.m., shares of Nanya Technology had climbed 3.85 percent to NT$2.97 with 1.36 million shares changing hands, while shares of Inotera had risen 5.95 percent to NT$4.63 on trading volume of 11.54 million shares.

The benchmark weighted index on the Taiwan Stock Exchange was down 0.02 percent at 7,810.40 points.

The two companies are the DRAM manufacturing arm of the conglomerate Formosa Plastics Group.

“The continued hikes in DRAM prices have given investors a strong hint that the industry seems to be reaching a turning point after a long slump,” Horizon Securities analyst Benson Huang said.

According to DRAMeXchange, a research unit of Taiwan-based market information advisory firm TrendForce, the asking prices of the benchmark DDR3 2Gb DRAMs have risen 4.5 percent-7.5 percent so far this year to a 15-month high.

Nanya Technology said the price recovery shows that demand and supply have stabilized and the supply glut period is past. Prices are expected to continue to rise in the first quarter of this year, the DRAM supplier said

DRAM firms in South Korea, which dominate the global market, are planning to continue to push up product prices, the local media has reported, citing market sources.

“The price hikes largely resulted from the efforts of major suppliers in the world to reduce production,” Huang said. “The shrinking effects of oversupply are expected to improve the sector's bottom line.”

He said the positive leads from a product price recovery are expected to continue to support the movement of DRAM stocks on the local bourse in the short term.

“But, with little indication of a strong rebound in demand for personal computers, these DRAM manufacturers are unlikely to reverse their massive losses any time soon,” Huang added.

He said his brokerage anticipates that Nanya Technology will report NT$1.60 in loss per share for 2013, compared with an estimated loss of NT$1.99 for 2012, while Inotera is expected to post NT$2.43 in loss per share for this year, compared with NT$3.02 in loss estimated for last year.

For Inotera, Huang said the stock is now benefiting from a syndicated loan deal, which is expected to help upgrade its production technology and lower operating costs.

“As part of Formosa Plastics Group, Inotera seems to have easier access to bank loans. Many investors are happy that the company has obtained funds for working capital to offset the impact of its massive losses,” Huang said.

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