Phison Electronics Corp (群聯) customers have not scaled back orders due to the COVID-19 pandemic, but instead shifted demand to the second half of this year, driven by demand for 5G-related technologies, the company said yesterday.
The NAND flash memory controller supplier said the pandemic and large-scale lockdowns in China did not significantly affect its business, as reflected in its strong revenue last month.
That shows that market demand was “real,” the company said.
“We are optimistic about this year’s outlook,” Phison chairman Pua Khein-seng (潘健成) told a teleconference. “We are seeing a strong first quarter. Our first-quarter results will surprise you.”
Phison has been building NAND flash memorychip inventory since October last year to cope with rising demand, which caused supply constraints in January and have boosted flash memorychip prices by more than 50 percent, the company said.
“Demand is not vaporizing,” Pua said. “The pandemic just pushed back 5G deployment a little bit.”
He said that 5G technology would drive demand for data centers, base stations and related devices, fueling the strongest growth for flash products in 10 years.
Phison has received order backlogs for September and October this year with rush orders for solid state drive (SSD) controllers, which have high gross margin, he said.
“Customers from Europe, US, Japan and China have asked us to build inventory in advance as they are worried about a component crunch once demand comes back rapidly later this year,” Pua said.
“Customers have requested shipment of the goods they ordered as soon as the transportation ban is lifted,” he added.
Flash controllers contributed 23 percent to its revenue last quarter totaling NT$44.69 billion. (US$1.47 billion).
Aside from SSD controllers, demand for flash modules used in medical devices is also on the rise, he said.
Additionally, as companies and schools roll out teleconferencing systems to curb COVID-19 infections, demand for NAND flash controllers and modules for data storage and Internet infrastructure has risen, Pua said.
Phison received new rush orders from equipment vendors to meet teleconferencing demand, he said.
This time was supposed to be different. The memorychip sector, famous for its boom-and-bust cycles, had changed its ways. A combination of more disciplined management and new markets for its products — including 5G technology and cloud services — would ensure that companies delivered more predictable earnings. Yet, less than a year after memory companies made such pronouncements, the US$160 billion industry is suffering one of its worst routs ever. There is a glut of the chips sitting in warehouses, customers are cutting orders and product prices have plunged. “The chip industry thought that suppliers were going to have better control,” said
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