Nanya forecasts continued tight DRAM supply
Taiwanese chipmaker says AI and new gadgets are boosting demand
CHENG TING-FANG, Nikkei staff writer
TAIPEI -- Taiwan's leading memory chipmaker Nanya Technology on Monday said the supply of dynamic random access memory (DRAM) chips would continue to be tight in the second half, driven by demand for data center servers, dual cameras in handsets, other artificial intelligence applications, and new voice-assistant gadgets.
"We are seeing supply to continue to be tight through the end of the year," said Nanya Technology president Lee Pei-ing, adding that his company expects supply and demand conditions to stay healthy through 2018.
Lee said that DRAM prices would go up some 4% to 6% for the current July to September period, and the price would likely stay at such levels through the end of this year. Nanya Technology is the world's fourth-placed DRAM maker, trailing Samsung Electronics, SK Hynix and Micron.
DRAM are the crucial memory chips found in almost every electronic product. The Taiwanese company does not supply Apple, but sells to Chinese mid-range smartphone makers, networking gear providers such as Huawei Technologies and ZTE, and a wide range of PC and consumer electronics makers.
The key growth generator for the DRAM industry mainly comes from more complicated features such as dual cameras, artificial intelligence applications for smartphones, and robust demand for data center servers, according to Lee. Demand is booming for a range of products featuring the chips, from 4K televisions, gaming consoles and automobiles, to emerging voice-activated devices.
Glitches affect production
On July 5 Micron Taiwan's DRAM facility was reported to be suspending part of its operations due to glitches in its nitrogen gas equipment, according to local media and industry sources. Micron is a supplier for mobile DRAM chips to be used in the upcoming iPhones. Micron's Taiwan facilities used to be a joint venture with Taiwanese partner Nanya Tech before the U.S. company bought the remaining stake of what was called Inotera last year.
Micron denied any major malfunction at its facility in Taiwan. But industry executives said it could still take some time for memory production to restart and go back to full operation.
Sean Yang, an analyst at CINNO, estimated that some 5,000 to 10,000 wafers were seriously damaged, and that the total impact would not be over 50,000 wafers, or around 5% of total global DRAM output.
"At least we don't expect the Micron incident could cause an impact on mobile DRAM supply for Apple's upcoming iPhones, as it is a smaller supplier that has some 15% of Apple's orders this year. The impact would be much more on the psychological side, for buyers to expect the price could go up in the near-term," said Yang. Samsung and SK Hynix are two major providers of iPhone DRAM chips, respectively controlling shares of about 50% and 35% of Apple's orders this year, according to Yang.
Nanya's Lee said it was not yet clear how Micron's output problems could affect the supply chain, as memory suppliers could rely on inventories for a while. It would take at least "one to two months" to learn the real impact of the incident.
For the April to June period, Nanya Technology generated 41.3% more revenue year-over-year, at 12.6 billion New Taiwan dollars ($415.9 million). The company's gross margin and operating margin, of 43.9% and 33% respectively in the period, improved substantially from 28.4% and 18.5% a year ago, thanks to robust market demand. Net profit of NT$6.44 billion, compared with NT$397 million in the year-ago period, was boosted by disposal gains of NT$3.79 billion from Micron's shares in the past three months.
Nanya Technology shares have risen nearly 10% since media reported about the Micron factory incident. They closed at NT$58.6 ahead of Monday's earnings announcement and have gained almost 22% so far this year.
Nikkei staff writer Chien Chia-hung contributed to this report.