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Pricing concerns impact Inotera, Nanya shares

Pricing concerns impact Inotera, Nanya shares

Taipei, July 28 (CNA) Shares of Inotera Memories Inc. and Nanya Technology Corp., two of Taiwan's leading dynamic random access memory (DRAM) chip makers, were down from early highs Wednesday because of worries over weakening prices, dealers said.
Investors also decided to sell because of concerns over a more than 30 percent sequential decline in the two DRAM firms' net profit for the second quarter, they said.
As of 12:19 a.m., shares of Inotera had added 0.53 percent to NT$18.80 (US$0.60), off an early high of NT$19.45, with 106.50 million shares changing hands, while shares of Nanya had risen 2.11 percent to NT$33.85, off an early high of NT$34.45, on trading volume of 4.73 million shares.
The weighted index on the Taiwan Stock Exchange was down 0.22 percent at 8,563.26.
The two stocks, which are the DRAM manufacturing arms of the Formosa Plastics Group, opened higher Wednesday as investors took cues from a 9 percent increase in U.S.-based counterpart Micron Technology Inc. on Wall Street overnight, dealers said.
Selling emerged in mid-morning, however, to erode the initial upturns, they said.
"The significant gains in early morning trading were simply technical in nature," Hua Nan Securities analyst Kevin Su said. "After a recent sell-off, investors seized on Micron's gains to buy into Inotera and Nanya for trading purposes."
"But investors quickly shifted their attention to the DRAM sector's fundamentals after the two companies reported disappointing results for the second quarter," Su said.
At an investor conference held Tuesday, Inotera reported a second quarter net profit of NT$4.59 billion, down 37 percent from a quarter earlier. It had earnings per share of NT$0.70 in the quarter, down from NT$1.11 in the first quarter.
Nanya announced a net profit of NT$4.25 billion, down 32.4 percent from a quarter earlier. EPS was NT$1.75, compared with NT$2.61 in the first quarter.
The two companies suffered a more than 10 percent decline in product prices because of excess supply in the DRAM sector, which was reflected in their gross profit margins.
Inotera's gross margin for the second quarter fell to 36.7 percent from the first quarter's 49.8 percent, and Nanya's fell to 42 percent from 47.2 percent.
Inotera and Nanya do not foresee a rosier picture anytime soon, expected DRAM prices to fall an additional 10 percent in the third quarter.
"An oversupply in the DRAM market is expected to continue to affect their pricing power. And I'm worried that Samsung Electronics Co.'s plan to increase its production capacity in the second half of this year will make market conditions even worse," Su said. (By Jackson Chang and Frances Huang)


Updated : 2021-09-28 10:14 GMT+08:00