Sat, May 27, 2017 page12

• Nanya Technology expects increased shortage of chips

  CAPACITY FRENZY: The biggest names in the industry have refrained from sharing technologies with Chinese firms out of fear of renewed overcapacity problems

  • By Lisa Wang / Staff reporter, in Taoyuan
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  Nanya Technology Corp (南亞科技), the nation’s biggest DRAM chip supplier, yesterday said its chip shortage would worsen next quarter as supply cannot catch up with rising seasonal demand for smartphones and consumer electronics.

  Supply constraints have been in place since the fourth quarter of last year as the world’s major chipmakers slowed their capacity expansion, which has prompted a price rebound after eight quarters of decline, Taoyuan-based Nanya Technology said.

  “The prices for mainstream DDR4 chips are still on the rise in the second quarter [even in the slack season],” company president Lee Pei-ing (李培瑛) told reporters. “The prices for consumer electronics also look quite stable.”

  The outlook for next quarter is also positive as the consumer electronics industry enters peak season, he said.

  “Chinese mobile phone companies are resuming inventory restocking again ahead of new model launches... We expect to see a mild shortage in the third quarter,” Lee said.

  For the volatile DRAM industry, slight supply constraints could prompt significant price hikes, the company said.

  Prices are to climb 10 percent this quarter from the previous quarter as demand growth is expected to be 1 percent faster than supply, the company said last month.

  Nanya Technology, like its industry peers, is counting on technological conversion to increase output and reduce manufacturing costs.

  The company said it is on track to ramp up its 20-nanometer (nm) chip production and expects to produce a small volume next quarter.

  At the end of this year, the cost to produce each 20nm chip is to become nearly equal to the cost for each 30nm chip, Lee said, hinting that the company could therefore make better profits, as it is able to produce more 20nm chips.

  As manufacturing costs continue to fall, the company sometime next year might see its net profit rise to a historically high level after beginning mass production of the cost-efficient 20nm chips, he said.

  Nanya Technology shareholders yesterday approved the distribution of a cash dividend of NT$1.5 per common share, based on the company’s earnings of NT$8.67 per share last year.

  Asked about China’s ambition to tap the semiconductor industry, Lee said he expects it would not pose a serious threat to the stability of the world’s memorychip industry within the next three to five years at least, due to its lack of patented technologies.

  China has pledged to expand its influence on the world’s semiconductor industry, especially the memorychip industry, which has raised concerns about renewed oversupply — as evidenced in the steel, LED, solar and LCD industries — due to a capacity-expansion frenzy, Lee said.

  Fearing another overcapacity-driven slump, major memory players such as Samsung Electronics Inc, SK Hynix Inc and Micron Technology Inc have refrained from licensing technologies to Chinese chipmakers, he said.

  Without licensed technologies, Chinese companies would find it difficult to sell their products at home and overseas, as the memorychip industry is highly protected by antitrust, intellectual property protection and corporate trade secret laws around the world, Lee said.

  Nanya Technology has strengthened its intellectual property protection measures to prevent key technologies from leaking to Chinese competitors, as well as increased labor benefits to retain skilled talent, he said.
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