Nanya Technology Corp (南亞科技), the nation’s biggest DRAM chip maker, should benefit from price increases and its expansion into the cryptomining supply chain, a foreign investment consultancy said, as it raised its earnings forecast for this year.
Nanya Technology’s net profit could climb to NT$37.84 billion (US$1.3 billion) this year, up 14 percent from its earlier estimate of NT$33.11 billion, Morgan Stanley said in a report dated Tuesday.
Earnings per share (EPS) should rise to NT$12.44 from NT$10.89, it said.
“We now assume that its DRAM prices will rise 3 percent quarter-on-quarter in the first half of 2018, followed by a 2 percent increase in the second half,” Morgan Stanley analysts Charlie Chan (詹家鴻) and Daniel Yen (顏志天) said.
The price hikes are driven by improving demand for PCs and servers, they said.
“If the incremental demand from cryptocurrency mining plays out, there could be upside to our DRAM price assumption for the second half,” the analysts said.
The company might “indirectly benefit from Ethereum mining demand in the second half of 2018, thanks to its DDR3 exposure,” they said.
Bitmain Technologies Ltd (比特大陸), the Chinese owner of the world’s largest cryptocurrency mining pools, is to introduce a new application-specific integrated circuit (ASIC) for Ethereum mining, and that would use the legacy DDR3 DRAM product from Elite Semiconductor Memory Technology Inc (晶豪科技).
That could push DDR3 prices higher, since it is a niche market, the report said.
Nanya Technology last month said that a small portion of its DRAM goes to Bitmain and other cryptocurrency mining machine suppliers.
Another investment bank Maybank earlier this month said in a note that Nanya Technology should benefit the most from the favorable supply-demand dynamics this year and next year.
Nanya Technology’s forecast 45 percent growth in output this year would top all its DRAM peers, Maybank said.
The company is also expected to start making DDR4 and server DRAM products this year, which should help its average selling price and margins, the bank said.
Nanya Technology would post sales of NT$87.1 billion and net profit of NT$40 billion, or EPS of NT$13.24, for this year, it added.
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