Phison Electronics Corp (群聯電子), a Taiwanese supplier of NAND flash memory controllers and modules, expects stimulated demand this quarter thanks to a 30 percent price correction for NAND flash memory chips, putting the industry back on a healthier path, a company executive said.
For Phison, “it is going to be a growth year at least in terms of shipments in 2018,” Phison chairman Pua Khein-seng (潘健成) told reporters during a media gathering on Friday night.
Shipments of NAND flash memory controllers are expected to increase 74 percent to 40 million units this year from 23 million units last year, Pua said.
The robust growth can be attributed to the company’s strong strategic partnerships with Toshiba Corp, which helps the company secure a sufficient supply of NAND flash memory chips ahead of its competitors amid a supply crunch, Pua added.
Toshiba holds a 10 percent stake in Phison.
Pua said the growth can also be attributed to support from Kingston Technology Co (金士頓), the world’s top independent supplier of NAND flash memory modules and one of the company’s major clients.
Kingston owns a 7 percent stake in Phison.
“Some analysts said 2017 would be the best year for Phison [in terms of profitability], but I’ll say [company profit in] 2018 or 2019 might surpass that of 2017,” Pua said.
Some analysts expected Phison to triple its net income last year from NT$24.67 per share in 2016, allowing the company to distribute a higher cash dividend of NT$16 to NT$18 per share, from NT$14 per share last year.
Pua declined to comment on the prediction.
The company’s upbeat outlook yesterday helped its stock price to rally to NT$320, the highest in more than two months. Turnover climbed to an almost six-month high at 4.56 million shares.
Commenting on the trend in memory chip prices, Pua said “it is reasonable and healthy to see prices come down in the first quarter ... but prices are not going to crash.”
“It is a good thing for us,” Pua said. “Lower prices will stimulate demand, which was down last year, causing prices to spike wildly.”
NAND flash memory prices last year alone skyrocketed 300 percent, Pua said.
A quarterly decline of 30 percent would be acceptable, as it should not significantly erode the profits of any memory chipmaker, he said.
Supply constraints are expected to return in the third quarter, aided by increased demand as customers seek to build up inventories ahead of the industry’s peak season, Pua said, adding that supply growth would lag far behind demand due to increased memory content per gadget and per unit shipment.
“The memory [content] of electronic devices is almost doubling every year,” Pua said. “New smartphones coming to the market this year will have 128 gigabytes, compared with 32 and 64 last year.”
However, NAND flash memory chip output will be limited by a technological migration in the industry from 2D to 3D technology, Pua said.
A fab with the capacity to install 100,000 wafers a month can only produce 60,000 64-layer 3D NAND flash memory chips, which represents a 40 percent discount in output, he said.
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