Memory module maker Adata Technology Co (威剛科技) yesterday posted its highest annual pre-tax income in three years at NT$1.61 billion (US$50.79 million) for last year as supply constraints boosted prices.
That represented a significant jump from NT$19.36 million in pre-tax income reported in 2015.
Last year’s robust earnings reinforced the company’s optimistic outlook for this quarter, bucking the seasonal downtrend.
The New Taipei City-based company said it “holds a bullish view about the market and expects demand to stay robust in 2017,” in a statement earlier this month.
Supply constraints of DRAM and NAND flash memory chips are to carry into the first quarter of this year, Adata said.
As a result, “product prices will continue to climb steadily. The company’s operation will also remain in high gear,” it said.
“Adata has been at least doubling its profits in the last months of 2016,” the company said in the statement. “In the first 11 months, the company recorded pre-tax earnings of NT$6 per share.”
Market researcher TrendForce Corp (集邦科技) expected contract prices for DRAM chips to rise more than 30 percent to about US$25 per unit this quarter, marking the first price hike during the traditionally slow season for the industry.
TrendForce expects severe supply shortages to extend through this year year as worldwide production is expected to only increase 19 percent annually, below the 22 percent annual growth in demand as memory storage for smartphones are rising drastically.
In 2015, Adata posted a loss of NT$48.64 million, or a loss of NT$0.2 per share, as memorychip prices plunged on sluggish demand for computers and oversupply.
Last year, Adata’s revenue grew 14.98 percent from NT$20.19 billion the previous year to NT$23.22 billion.
The company attributed the growth largely to its solid-state drives (SSD). Shipments and revenue of SSD products rose to an all-time high last year. That helped revenue contribution from SSD products rise to 30 percent last year from 25 percent a year earlier.
DRAM products, the company’s biggest revenue source, accounted for 38 percent of revenue last year, while NAND flash products accounted for 18 percent.
Adata shares fell 0.4 percent to NT$50 yesterday, falling for the third consecutive session.
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