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June 24, 2017

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Inotera upbeat on its second-quarter performance after announcing deal

TAIPEI, Taiwan -- Memory manufacturer Inotera (華亞科) yesterday announced optimistic prospects for the second quarter during its shareholders' meeting, in addition to announcing its board approval for a private equity deal with Formosa Plastics Group (FPG, 台塑集團).

At the completion of the acquisition deal, consisting of a shares transfer nearing NT$2.4 billion, FPG will hold a 36-percent stake in Inotera, matching the holdings of the company by Micron Technology (美光).

The company recorded revenues of NT$35.337 billion in 2012, down 6 percent year-on-year, and netted losses of NT$15.538 billion in the same period, up 2.6 percent year-on-year, while yielding minus NT$2.95 in its earnings per share.

For the first quarter, the company recorded revenues of NT$8.6 billion, netting losses of NT$610 million, a year-on-year improvement of 86 percent.

Inotera Chairman Charles Kau (高啟全) said that he expects the memory sector's performance to improve markedly in the second quarter, as global demand continues to outstrip supply.

The company's primary goal this year is to develop a multi-faceted product line at the lowest cost possible, while increasing its 30-nanometer fabrication capacity, said Kau.

The firm said that by the end of April, its shipping volume of 30-nanometer memory had exceeded 100,000 units.

Meanwhile, the company is poised to benefit from its deal to supply Micron Technology with modules for higher margin DRAM products intended for consumer electronics, servers and mobile handsets, said Kau.

Overall, the pricing for standardized DRAM format products has rebounded to a healthy level, given that overall supply has declined globally, following the dismantling of numerous memory makers in recent years, said Kau.

Citing a study by research institute DRAMeXchange, Kau said that the average price of 2 gigabyte DDR3 modules have surged 112 percent, from US$0.8 to US$1.7 per unit.

Over 90 percent of the global market for memory is commanded by Samsung, Micron, and SK Hynix, Kau said, adding that since each firm is reluctant to expanding its production capacity, it is likely that the global demand for memory will continue to surpass supply.

Competition in the sector will be based on companies' ability to keep up with leading-edge fabrication processes, the chairman added.

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