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Inotera, Nanya shares down on Samsung investment

Inotera, Nanya shares down on Samsung investment

Taipei, Oct. 7 (CNA) Shares of Inotera Memories Inc. and Nanya Technology Corp., two of Taiwan's leading dynamic random access memory (DRAM) chip suppliers, came under pressure Tuesday morning after rival Samsung Electronics Co. announced plans to build a new memory chip plant, dealers said. The two stocks were also hurt by shares of U.S.-based DRAM maker Micron Technology Inc., which lost 4 percent overnight amid fears that Samsung's plan will trigger a supply glut in the global memory chip business, they said. As of 11:38 a.m., shares of Inotera had fallen 1.83 percent to NT$43.00 (US$1.41), with 44.17 million shares changing hands, while shares of Nanya had fallen 4.21 percent to NT$59.20 on trading volume of 374,000 shares. The two companies are the DRAM manufacturing arm of conglomerate Formosa Plastics Group. The weighted index on the Taiwan Stock Exchange was down 0.53 percent at 9,046.65. The semiconductor sub-index was down 1.17 percent at 111.33. "Samsung's announcement of its new investment struck the nerves of many investors who fear that the global DRAM business will suffer an oversupply in the future," Grand Fortune Securities analyst Chen Wei-tai said. Samsung announced Monday that it will invest 15.6 trillion South Korean won (US$14.7 billion) in a new facility in South Korea to make memory chips and logic chips. The new plant, to be located south of Seoul in the city of Pyeongtaek, is scheduled to begin operations in 2017 and is intended to meet solid global demand for smartphones. Market information advisory firm Gartner said that even before the new Samsung plant begins production, the global memory chip industry is likely to see a supply glut in 2016, which could cause sales of DRAM makers to fall 25.5 percent from a year earlier. "Concerns over a supply glut have been running deeper, especially after investors witnessed a plunge in Micron shares overnight," Chen said. Micron has close business ties with Inotera and Nanya as Inotera is a joint venture between Micron and Nanya and serves as a contract supplier to the U.S. firm. "Although the details of the new plant remain unclear, investors tended to responded negatively to the news right away," Chen said. "However, I think as the new plant will not become operational until 2017, it is unlikely that the bottom line of the global DRAM business will be hurt in the short term, and Inotera and Nanya are expected to remain profitable this year." In the first half of the year, Inotera posted NT$3.53 in earnings per share (EPS), up from NT$0.52 in EPS recorded a year earlier, while Nanya's EPS stood at NT$5.52, up from NT$1.09 registered a year ago. Chen said the current downturn also reflected foreign institutional selling in the two DRAM stocks, in particular Inotera shares, on Monday. According to the Taiwan stock exchange, foreign institutional investors on Monday sold a net 23.20 million Inotera shares, the largest net sell volume among all stocks listed on the exchange. They also sold a net 20,000 shares in Nanya. (By Frances Huang)


Updated : 2021-06-21 11:27 GMT+08:00