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DRAM stocks boosted by Micron's results

DRAM stocks boosted by Micron's results

Taipei, Jan. 8 (CNA) Shares of Taiwan-based dynamic random access memory (DRAM) chip makers got a boost Wednesday morning from the better-than-expected results released by U.S. DRAM supplier Micron Technology Inc. overnight, dealers said. Among the local DRAM stocks, Nanya Technology Corp. and Inotera Memories Inc., which both have close business ties with Micron, attracted stronger buying. Inotera is a joint venture between Micron and Nanya. The two local companies are the memory manufacturing arms of one of Taiwan's biggest conglomerates, the Formosa Plastics Group. As of 12:20 p.m., shares of Nanya had risen by the maximum daily increase of 7 percent to NT$5.49 (US$0.18), while shares of Inotera had risen 5.94 percent to NT$25.85. The weighted index on the Taiwan Stock Exchange was up 0.61 percent at 8,563.96. "The stronger-than expected Micron results (in the quarter to November) made many investors happy this morning," Hua Nan Securities analyst Stan Chang said. "The market has high hopes that Nanya and Inotera will follow suit and report a net profit for the fourth quarter of last year," Chang said. At an investor conference, Micron said its revenue more than doubled to US$4.04 billion in the memory maker's fiscal first quarter, compared with the same period of last year, beating a market estimate of US$3.72 billion. In the three-month period, Micron reported US$358 million in net profit, or US$0.30 a share, compared with a net loss of US$275 million, or US$0.27 a share recorded a year earlier. Micron said the significant growth in sales largely resulted from its acquisition of Japanese rival Elpida Memory Inc. in July. Other listed DRAM companies that do not have such close business ties with Micron also posted smaller gains, with shares of Windbond Electronics Corp. up 0.85 percent at NT$8.28 and shares of Transcend Information Inc. up 0.69 percent at NT$88.00 as of 12:20 p.m. Chang said DRAM vendors have benefited from more stable prices over the past year because of cuts in capacity to rein in supply. They were given additional pricing power when a fire at SK Hynix Inc.'s plant in Wuxi, China, in early September further constrained global supply, Chang said. According to DRAMeXchange, a Taipei-based DRAM market research group, the average price of the benchmark DDR3 2Gb DRAMs in the spot market rose 150 percent in 2013 and 62 percent since Sept. 4 after the Hynix fire broke out.
"Nanya and Inotera have benefited from these positive trends. Based on their fourth quarter sales, there is no doubt that the two companies will continue to report a profit in the quarter," Chang said. In the October-December period, Nanya posted NT$12.42 billion in consolidated sales, up 8.37 percent from a quarter earlier, while Inotera's consolidated sales totaled NT$20.67 billion, up 21.98 percent quarter-on-quarter and the highest for a quarter in the company's history. In the third quarter, Nanya technology reported NT$0.08 in earnings per share, up from NT$0.07 in the previous quarter, while Inotera posted EPS of NT$1.21, nearly double its EPS of NT$0.62 in the second quarter. "But investors should beware when buying the two stocks because they have gained significantly in recent sessions on earnings expectations," Chang said. The analyst said Nanya shares are likely to face stiff technical resistance at around NT$6, while Inotera shares could be capped at around NT$27-NT$28. (By Jackson Chang and Frances Huang)


Updated : 2020-12-06 02:27 GMT+08:00