DRAM chipmaker Nanya Technology Corp (南亞科技) expects this year to again be lucrative, given vigorous server DRAM demand and cautious capacity expansion plans from the world’s major suppliers to curb oversupply risks, a company executive said yesterday.
A 35 percent year-on-year jump in DRAM prices last year helped boost Nanya Technology’s net profit to an all-time high of NT$40.29 billion (US$1.38 billion), including a disposal gain of NT$32.15 billion after the sale of its stake in Micron Technology Inc.
“There is a big chance that the company’s operating profit will be higher than last year,” Nanya Technology president Lee Pei-ing (李培瑛) told reporters at a media gathering.
“The industry’s uptrend only kicked off in the second half and is to extend into the whole of this year,” Lee said. “The strongest demand comes from servers and data centers.”
On the supply side, he said he expects that disciplined capacity expansion from the world’s top three players, led by Samsung Electronics Co, would not tilt the supply-demand balance until at least the end of this year.
Nanya Technology last year more than doubled its operating profit to NT$18.8 billion from NT$8.55 billion in 2016, thanks to robust demand and better-than-expected migration to 20-nanometer technology from 30nm technology.
To enhance its ability to produce high-value products, Nanya Technology has built a team of 200 engineers and researchers to develop next-generation, 10nm technology and products, Lee said.
The company has budgeted capital spending of NT$11.5 billion this year, mostly to develop advanced technologies, new products and 20nm equipment.
Apart from better technology capabilities, Lee’s confidence about the company’s outlook also builds on fundamental changes in the DRAM industry, due to the growing diversity in DRAM applications and a significant increase in new smartphone memory.
New devices, including autonomous cars, cryptocurrency mining machines and voice assistant services, are also driving DRAM demand, he added.
Nanya Technology supplies a small amount of its DRAM to Bitmain Technologies Ltd (比特大陸), the Chinese owner of the world’s largest cryptocurrency mining pools, and other cryptocurrency mining machine suppliers.
DRAM supply this quarter is slightly lagging behind market demand, which has caused modest price hikes, Lee said, adding that the trend is expected to carry into next quarter.
Next year will likely be stable for the worldwide DRAM industry, given that supply is to grow at an orderly pace to match demand, he said.
Nanya Technology is also re-entering the market by supplying DRAM used in servers after it starts supplying high-density 8-gigabyte DDR4 DRAM to fuel growth, Lee said.
Internet services suppliers Facebook, Tencent Holdings Ltd (騰訊) and Alibaba Group Holding Ltd (阿里巴巴) are all potential clients, the company said.
Nanya Technology’s goal is to generate 10 percent of its revenue this year from server DRAM, Lee said.
The company’s board of directors yesterday approved a cash dividend distribution totaling NT$10.88 billion with payments ranging from NT$3.5 to NT$3.62 per common share.
The board also gave the go-ahead to an employee bonus of NT$1.36 billion primarily to retain skillful employees, a spike from last year’s NT$460 million.
Nanya Technology said it lost 50 experienced engineers last year to Chinese talent poaching.
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