Wed, Jul 05, 2017 - Page 12 News List

Adata is riding high on upturn in DRAM cycle

DIVERSIFICATION:The company is tapping into other markets for growth, such as control boards for cars and robotics, starting with its Arobot home robot

By Lisa Wang  /  Staff reporter

Benefiting from the longest upswing in the history of the DRAM industry, Adata Technology Co (威剛科技) yesterday said that net profit this year could rise to the same level as its share capital of NT$2.3 billion (US$75.34 million).

That would represent a jump of more than 70 percent from its net income of NT$1.33 billion, or earnings per share of NT$6.21, last year.

DRAM prices started a new round of increases recently on restocking demand, ahead of the peak season in the second half of the year.

In the third quarter alone, DRAM prices are forecast to rise more than 10 percent from the previous quarter, as growing demand aggravates a persistent supply crunch, Adata chairman Simon Chen (陳立白) said.

“We expect memorychip prices to continue rising through the end of the year, which would be a much longer upcycle than we thought,” Chen told reporters.

With the upswing forecast to last for about 18 months since DRAM prices began surging in June last year, that would make it longer than the previous upturn in 2013, which lasted 15 months, when fires at SK Hynix Inc’s Chinese plant disrupted global production, Chen said.

He added that the boom could extend into the first half of next year, on the back of stronger-than-expected demand across the board, including data centers, mobile phones and computers, Chen said.

Demand for data centers has exceeded Adata’s expectations, as Chinese and US e-commerce giants spend lavishly on memory chips to expand their data center storage, Chen said.

Sales of new smartphones from Apple Inc and Chinese brands are forecast to stimulate DRAM buying as memory demand for new models doubles, he said.

Benefiting from the upturn, Adata’s gross margin should rise significantly this quarter, he said.

Revenue this year is expected to grow by 30 to 40 percent from NT$23.24 billion last year, he said.

Aside from DRAM modules, which accounted for about 48 percent of the company’s revenue of NT$8 billion in the first quarter, Adata is diversifying to explore new growth engines.

It is tapping into the market for control boards used in cars, which delivers a higher margin of about 50 percent.

The company plans to send its car control boards to Chinese automakers for qualification and expects them to start contributing to revenue next year.

Adata is also promoting a home robot as part of its move into commercial artificial intelligence products, in light of growing demand for smart cars and robots.

The company will start taking orders for its home robot — dubbed Arobot — next month and expects revenue from its robotics business to reach NT$1 billion within one year of its launch in May.

Chen expects robotics to contribute about NT$10 billion to Adata’s revenue in the next five to six years.

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