Although the nation’s major DRAM makers have seen losses shrink in the first quarter from the previous quarter, higher industry volatility will continue to weigh on the sector over the next few quarters, Taiwan Ratings Corp (中華信評) said yesterday.
In a report issued yesterday, Taiwan Ratings said industry volatility had become the norm for global DRAM makers over the past few years, leading to industry -uncertainties, volatile prices and divergent credit profiles.
On Wednesday, Nanya Technology Corp (南亞科技), Inotera Memories Inc (華亞科) and Powerchip Technology Corp (力晶半導體) all posted narrowed quarterly losses in the first quarter from the final quarter of last year, with better expectations for the current quarter.
However, Taiwan Ratings said the sector was unlikely to experience a rapid recovery this year and companies’ profitability was unlikely to recover swiftly even if prices stabilize in coming quarters.
“We believe larger DRAM companies with broader product diversification are better positioned to withstand the current recession compared with weaker marginal players, including Taiwanese DRAM makers,” Taiwan Ratings credit analyst Raymond Hsu (許智清) said in the report. “Nonetheless, all industry players face difficult decisions over the next few quarters to protect their creditworthiness from deteriorating.”
Nonetheless, Nanya Technology and Inotera are likely to remain financially viable for the foreseeable future through their parent Formosa Plastics Group's (台塑集團) continued financial support, the report said.
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