Nanya Technology and Inotera Report Strong Biz Results for December 2013

Dynamic random access memory (DRAM) makers Nanya Technology Corp. and Inotera Memories Inc., both under the Formosa Plastics Group (FPG), reported strong earnings and sales for Decembers 2013, mostly thanks to supply shortage after a fire at SK Hynix Inc.'s factory in Wuxi, China in September 2013, resulting in surging DRAM prices to hamstring the world's No.2 memory-chip maker.

In December, Inotera had revenue of NT$8.1 billion (US$271.5 million), rising 26.2% from the previous month to hit a new high, while Nanya saw revenue increase 8.4% month on month, to NT$4.1 billion (US$138.9 million).

With the uptrend continuing into the first month of 2014, industry executives estimate the two chipmakers' revenue for Q1, 2014 to only drop a moderate quarterly 5% in spite of fewer work days in the quarter.

In the fourth quarter of 2013, Inotera saw revenue of NT$20.6 billion (US$688.9 million) to hit another high and rise 22% from the previous quarter, topping market expectations of a 15-22% growth. Throughout that year, the company's revenue was NT$58.9 billion (US$1.9 billion), spiking 67.1% year on year.

Industry executives estimate Inotera's earnings for 2013 at NT$20 billion (US$666.6 million), with the earnings for the fourth quarter projected to comfortably exceed the NT$10 billion (US$333.3 million) benchmark.

At Nanya, consolidated revenue for the fourth quarter amounted to NT$12.4 billion (US$413.9 million), up around 8.4% from a quarter earlier in line with market expectations. Industry executives estimate the company's earnings for 2013 at NT$10 billion (US$333 million) and earnings for the fourth quarter at NT$6 billion (US$200 million) for the company's core business turned around to profitability and it can book Inotera's earnings.

Although SK Hynix reported that its Wuxi factory was recovering smoothly and would return to pre-fire status in output volume by the end of January, memory-module makers feel that supplies of commodity DRAM chips will remain short in the current quarter because the factory needs some time to verify chips at original equipment makers (OEMs) of personal computers after full recovery while prioritizing production of graphics DRAMs for game consoles and graphics cards over standard DRAMs.

The suppliers point out that since the beginning of this year, spot-market prices of 4Gb DDR3 DRAM and 2G DDR3 DRAM have rose 2% and 9%, respectively. Spot-market price of the niche x16 DRAM chip has gained around 5%. (KL)