Inotera boss upbeat on outlook

Inotera Memories Inc (華亞科技), a 50-50 joint venture of Infineon Technologies AG and Nanya Technologies Corp (南亞科技), yesterday cast an upbeat outlook for the volatile industry, citing insufficient supply over the next two years.

Reflecting the optimism, the three-year-old computer-memory maker plans to boost its output by more than 70 percent this year from last year and is building its second 12-inch fabrication plant.

"2006 and 2007 will be good seasons for the memory industry," Inotera president Charles Kau (高啟全) said. "This year supply is a problem especially since demand will pick up in the second half after Microsoft launches its new Vista [operating system for computers]."

Only a few local computer-memory makers such as ProMOS Technologies Inc (茂德科技) are aggressively expanding production, Kau said.

He forecast that global sales of computer memory chips would grow at 45 percent annually to US$28 billion during the next four years, compared to the previous annual increase of 30 percent.

"The price decline for the next two years will not be as drastic as the last few years, bolstered by supply constraints," he said.

The price for second-generation double data rate (DDR2) rocketed more than 40 percent to hit a peak at US$5.29 per unit last month on growing demand for Intel Corp's new dual-core chip, according to the Taipei-based market researcher DRAMeXchange.

The price would come down in the traditionally slow season in the second quarter, but the decline would not be big, it said.

Inotera primarily makes the DDR2 chips.

Kau talked to investors yesterday ahead of the company's scheduled initial public offering (IPO) on the Taiwan Stock Exchange on Friday.

Inotera plans to raise NT$6.6 billion (US$203.1 million) by selling 200 million new shares at NT$33 per share.

The offering represents about 7.4 percent of the total 2.7 billion outstanding shares.

The company is seeking funds to build a new factory, which is scheduled to start mass production in the second quarter of next year.

An overseas share sale is planned for later this year in the form of global depositary receipts equivalent to 400 million common shares, Kua said.

Investors, however, voiced concerned yesterday over the possibility of Inotera attracting more human resources or even investors from Nanya Technology.

"Inotera is cheaper and has stronger profitability than Nanya," said a foreign investor who asked not to be named.

Inotera earned NT$5.9 billion last year, or NT$2.36 per share, on revenues of NT$23.03 billion.

"Inotera only manufactures chips for our parent company and does not sell [branded] products like Nanya Technology," Kua said.

Inotera also plans to start making memory chips for other companies on a contract basis, he said.