Nanya Technology Corp (
"Prices are well above the level that we can break even as of today. It's difficult to predict the price trend for the second half, but we're fairly optimistic," Nanya Technology spokesman Pei Pai-lin (
Nanya Technology reported a loss of NT$0.43 a share last year. Merrill Lynch expects the Tao-yuan-based chipmaker to earn NT$0.81 per share this year.
The supply glut should end this year, Pei said, with demand and supply reaching equilibrium.
The DRAM sector is vulnerable to the price fluctuations as a result of minor fluctuations in supply and demand, Pei said.
More importantly, companies are expected to begin replacing their computers in the second half, which will drive demand for memory chips, Pei said.
In February, half of Nanya Technology's memory chips were used for personal computers, according to the company.
Some 18 percent were for graphics and consumer electronics.
With new demand from digital electronics, "supply is expected to tighten in the second half as the increase in DRAM supplies will lag behind that of demand," Pei said.
His remarks are in line with bigger rival Samsung Electronics Co's projection of a shortage of DRAM for PCs in the July-to-December period.
Commenting on the price trend, Pei said: "Spot and contract prices are trending up. And we haven't seen a clear sign for a downtrend before April."
The spot and contract prices for DDR 256Mb/400MHz memory chips, the type commonly used for computers, are expected to remain firm during the next seven days, according to the latest forecast by online pricing fixer DRAMeXchange.
The spot price will rise to between US$4.40 and US$4.65 a unit and the contract price will rise to between US$4 and US$4.31 a unit, the exchange said.
Despite the healthy outlook for the sector, Merrill Lynch kept its "neutral" stance on Nanya Technology in its latest report, saying that the company's biggest challenge, despite the upturn in demand, is capacity constraints.
Most local competitors are ready to leverage their 300mm wafer capacity, whereas Nanya Technology is still in the preparatory stage, Merrill Lynch said.
Nanya Technology's 300mm capacity is coming from Inotera Memories Inc (
"Investors can leave that worry behind. We certainly will be able to enjoy the boom," Pei said.
"The construction of the plant is sticking to our schedule. And the speed at which we can ramp up production will be much greater than for our local rivals," Pei said.
Inotera is slated to start shipping small volumes in the second quarter before mass production starts in the third quarter, Pei said.
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