Thu, Jul 25, 2013 - Page 14 News List

UBS raises Inotera forecast on higher prices

By Lisa Wang  /  Staff reporter

UBS Securities yesterday raised its forecast for Inotera Memories Inc’s (華亞科技) operating profit this year by 47 percent after the DRAM chipmaker posted quarterly profits that greatly exceeded the expectations of most analysts.

Inotera, a joint venture between local DRAM chipmaker Nanya Technology Corp (南亞科技) and Micron Technology Inc, posted 44 percent higher net profits for last quarter, UBS semiconductor analyst Nicolas Gaudois said in a research note issued yesterday.

The Taoyuan-based chipmaker posted NT$3.47 billion (US$116 million) in net profit in the second quarter, its first quarterly profit in 13 quarters.

UBS attributed the strong growth to a higher-than-expected 19 percent sequential increase in wafer shipments, compared with UBS’ forecast of 15 percent growth.

The better quarterly profits prompted Gaudois to raise his forecast for Inotera’s operating profit this year by 47 percent to NT$15.7 billion and to increase his forecast for the chipmaker’s operating profit next year by 150 percent to NT$13.6 billion.

“We updated our estimates on the back of revised up DRAM average selling prices, but also the effects of 20-nanometer [production] ramp-up in 2014,” Gaudois said in the note.

The positive impact from the technological migration to 20-nanometer technology would lead to an 80 percent increase in production compared with 30-nanometer technology, he said.

Inotera boosted its capital spending to NT$8 billion this year from an earlier forecast of NT$4.5 billion in preparation for a pilot run of its next-generation 20-nanometer technology at the end of this year.

As the spending would be used to update technology rather than on building a new factory, UBS said it expects no “concerns about DRAM industry supply.”

The significant increase was in line with UBS’ expectations, the note said.

UBS also increased its target price for Inotera shares to NT$18 from NT$16, while retaining its “buy” rating. That represented a 25 percent upside from Inotera’s closing price of NT$14.4 yesterday.

The stock rose 1.41 percent yesterday, while the TAIEX declined 0.22 percent.

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