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May 27, 2017

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Memory storage could get boost from H2 smartphone demand

TAIPEI, Taiwan -- The global memory storage industry could get a boost from solid demand for smartphones in the second half of this year and the supply of dynamic random access memory (DRAM) chips is expected to remain tight, according to DRAMeXchange.

The research unit under Taipei-based market information advisory firm TrendForce Corp. said that as a result, DRAM prices could continue to climb in the second half of the year to further strengthen DRAM suppliers' bottom lines.

Inotera Memories Inc. and Nanya Technology Corp., two DRAM manufacturing arms of conglomerate Formosa Plastics Group, are expected to benefit from such an uptrend and continue to report a net profit, according to the market analyst firm.

DRAMeXchage said the average contract price of DDR3 4GB DRAMs is expected to top the US$33 quoted for July and August, which are up from the US$30.5 quoted for the second half of June. Strong demand will keep DRAM prices high in the third quarter, the research group said.

Avril Wu, an analyst with DRAMeXchange, said smartphone shipments in 2014 are expected to grow 29 percent from a year earlier to 1.196 billion units as China is gearing up to develop its fourth generation Long Term Evolution (4G LTE) network.

In addition, Wu said, with Apple Inc. expected to launch the next generation of iPhones in September, the momentum for growth in memory chip shipments could accelerate in the later part of the year.

In terms of NAND flash market, due to an increase in orders for OEM services and module manufacturing, the demand-to-supply conditions are expected to tilt toward a balance in the second half of this year, reversing a supply glut seen in the first half, DRAMeXchnage said.

With customers competing to secure NAND flash supply, the research group said, such memory chip makers could witness their pricing power strengthened in the second half of the year.

Due to a wave of PC replacements after Microsoft ended support to the Windows XP operating system, DRAMs used for PCs will become tight in the third quarter and such a tight supply could continue into 2015, according to DRAMeXchange.

The research group said PC DRAMs are also expected to benefit from the big data development in many countries to see increasing demand.

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