Phison Electronics Corp (群聯), a NAND flash memory controller supplier, yesterday said that a supply crunch would extend into next year as strong smartphone demand in emerging markets is expected to significantly boost memorychip use.
“Messages from our [NAND flash chip] suppliers show that supply will be short for almost all of next year, except for a short break in the first half,” Phison chairman Pua Khein-seng (潘健成) told investors yesterday.
“The latest shortage is the severest I have seen since 2003,” Pua said. “We can only satisfy 20 percent of the orders placed by clients” for our solid-state-drive (SSD) controllers.
Pua attributed the launch of Apple Inc’s new iPhone 7 series and a large-scale upgrade of smartphones in developing countries to customers’ voracious appetite for NAND flash controllers last quarter.
The new iPhones are equipped with bigger NAND flash memory capacities from 32 gigabytes upward, doubling the minimum capacity of 16 gigabytes for previous models.
The supply of NAND flash chips is also limited by slow technological transition to 3D NAND flash memory chips from 2D NAND flash memory chips, given the lower yield rates, Pua said.
As a result, Pua expects tight supply to occur again in the third quarter next year, when the electronics industry enters its peak season, adding that the situation could be even worse than this year.
Market researcher TrendForce Corp (集邦科技) said that supply constraints would continue next year, due to technological challenges.
The researcher said global supply of NAND flash memory chips should grow at an annual rate of 43 percent next year, below an estimated 45 percent increase in demand.
Phison yesterday posted 54 percent quarterly growth in net profit at NT$1.48 billion (US$46.85 million) last quarter, compared with NT$960 million in the second quarter. Earnings per share jumped from NT$4.87 to NT$7.6.
Last quarter’s net profit set an all-time high in the company’s history as a serious shortage of NAND flash memory chips boosted prices.
When asked about whether Phison would accept merger-and-acquisition proposals, Pua said the company would not consider any takeover bids, as it is entering a rapid growth period in terms of net profit.
Phison might consider becoming a private company, he said.
Phison shares rose 1.4 percent to NT$217 yesterday, underperforming the TPEX, which soared 3.54 percent.
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