Memory module supplier Adata Technology Co (威剛科技) yesterday said that its net profit surged 40 percent year-on-year to NT$1.86 billion (US$63.76 million) last year, compared with NT$1.33 billion in 2016, amid one of the longest upturns in the history of the memorychip industry.
Earnings per share jumped to NT$8.59 from NT$6.21 in 2016, the company said in a statement.
Robust demand for DRAM and NAND flash memory products last year caused supply constraints and pushed up average selling prices.
The output of the world’s major memorychip makers soared 76 percent last year, according to market researcher TrendForce Corp (集邦科技).
Adata said gross margin edged 0.35 percentage points lower to 13.89 percent as prices started weakening in December last year due to seasonal factors.
However, revenue expanded 38.77 percent year-on-year to NT$32.25 billion from NT$23.24 billion, hitting its highest level in four years.
More than half of last year’s revenue came from DRAM products, up from 37.84 percent in 2016, Adata said.
The company’s board has approved the distribution of a cash dividend of NT$6 per common share, representing a payout ratio of 70 percent, up from 64 percent last year.
The distribution implies a yield of 8.19 percent compared with the company’s closing price of NT$73.3 in Taipei trading yesterday.
The dividend proposal is subject to approval by shareholders at the company’s annual meeting on June 15.
Looking ahead, Adata said it remains optimistic about the memorychip market this year, given limited new capacity, as well as strong demand for cloud-enabled servers and gaming computers.
“On the DRAM front, in particular, additional new supply will not have an impact on the [supply-demand dynamic] as most of new capacity would only be available in the second half of the year,” Adata chairman Simon Chen (陳立白) said in a statement.
The company has built a strong foothold in the memory market, Chen said.
However, it is stepping up its diversification and increasing investments in non-memory businesses, such as robots with artificial intelligence, electric motors, automotive electronics and drones, he said.
The new products would command higher margins than memory products, he said.
The new ventures are expected to generate good profits this year and next year, Chen said.
To facilitate the new product lines’ growth, Adata said it plans to allocate more resources to building its own sales channels in overseas markets.
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