Memory module maker Apacer Technology Inc (宇瞻) yesterday said that the COVID-19 outbreak might affect demand in the short term, but growing interest in server chips could exacerbate supply constraints in this segment and lift prices next quarter.
The outbreak has “mainly affected the demand, rather than the supply side,” as Chinese factories have been slow to resume operations, Apacer said.
However, server chip demand is growing rapidly, propelled by the stay-at-home economy as people avoid public areas amid fears of contracting the virus, it said.
“Server demand has soared in the first quarter, given already-low inventory and fast-growing demand for all sorts of online applications,” Apacer president Chang Chia-kun (張家騉) told an investors’ conference in Taipei.
“Based on our information, the world’s three biggest DRAM suppliers are seeing inventory run low to about four to six weeks. We do not expect a price decline at this point,” he said.
DRAM contract prices are likely to rise sequentially in the second quarter, Chang said, with the uptrend possibly extending into the second half of the year, backed by launches of new game consoles and 5G smartphones, in addition to strong commercial demand for servers.
“Although demand appears to have dwindled, most companies are not willing to cancel chip orders. I believe demand would recover,” he said.
Flash memory chips are likely to face a similar shortage, as migration to next-generation technology — or 3D chips — has affected yields, he said.
The outbreak has weakened demand for Apacer’s industrial solid-state-disc (SSD) modules and other storage products, as electronics manufacturing service providers are restoring operations at a pace slower than it expected, Chang said.
Most customers have only resumed between 40 and 60 percent of their operations in China, he said.
A full resumption is expected in June, he said.
Apacer, headquartered in New Taipei City’s Tucheng District (土城), said the outbreak has had a minor impact on its production as its factories are in Taiwan.
The company expects revenue this quarter to be flattish from the NT$1.94 billion (US$64.58 million) it posted a year earlier.
Gross margin is forecast to remain the same as in third quarter last year at 23 percent, the company said.
Apacer’s net profit rose 5 percent to NT$377 million last year, compared with NT$359 million in 2018, with earnings per share rising from NT$3.56 to NT$3.73.
Gross margin improved to 18.7 percent from 13.86 percent in 2018, bolstered by sales of higher-margin products, it said.
Revenue dipped 21 percent to NT$7.49 billion last year, from NT$9.44 billion in 2018, with industrial memory products accounting for 70 percent of the total and consumer electronics chips making up the remainder.
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