With expectations of higher spot and contract prices in the third quarter, the US investment bank Morgan Stanley said investors could buy more shares of Taiwan's dynamic random access memory (DRAM) chip makers.
In a report released yesterday, Morgan Stanley suggested investors invest in Nanya Technology Corp (南亞科技), Powerchip Semiconductor Corp (力晶半導體) and Winbond Electronics Corp (華邦電子).
"We expect 256 megabit DRAM spot pricing to reach US$3 soon from about US$2.5 currently on improved seasonal demand," Morgan Stanley analyst Frank Wang (
The DRAM contract prices this month are expected to increase by 3 to 5 percent and the price hike trend should continue next month and in September, Wang said.
The price rebound, combined improved seasonality, would bring Nanya Technology and Winbond Electronics back to profitability in the July-September period from a dull second-quarter performance on weak DRAM prices, the analyst said.
Powerchip Semiconductor rose 2.04 percent to close at NT$25 on the Gretai Securities Market. Nanya Technology and Winbond Electronics shares rose by 1.01 percent and 2.36 percent to NT$25 and NT$13, respectively, on the Taiwan Stock Exchange.
Morgan Stanley raised its price targets for this quarter for Nanya, Powerchip and Winbond to NT$28, NT$27 and NT$14, respectively.
Nanya Technolgy also saw its share price rise on news that it confirmed the construction schedule of its first 12-inch fab.
The company is set to raise capital for the plant next year and begin 90-nanometer production in 2007, the DigiTimes yesterday reported on its Web site, citing the company's president Lien Jih-chang (
In light of DRAM sector's improved prices and positive market sentiments, the Califonia-based research institute iSuppli Corp on Tuesday raised its near-term rating of the sector to "neutral" from "negative," which had been maintained since last December.
Spot prices for 256 megabit DDR DRAM jumped by 4.4 percent last Friday, or 9.1 percent last week, the biggest weekly price surge since April 9 last year, driven by the supply shortage, according to the Taipei-based DRAMeXchange.com.
The spot price for DDR 256Mb 400 MHz rose to an average of US$2.65 per unit, up from US$2.64 the day before, with a daily high hitting US$2.95 per unit yesterday, DRAMeXchange said.
However, the sector's overall performance is not impressive, as iSuppli predicts DRAM revenue to rise to just US$26.5 billion worldwide this year, from US$26.4 billion last year, due to pricing and demand weakness in the first half. It said average selling prices would decline by 34 percent, depressed by a considerable DRAM bit production growth of 52.7 percent this year.
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