Adata Technology Co (威剛), a supplier of memory modules and solid-state drives (SSDs), yesterday said that net profit last quarter nosedived due to an oversupply-driven price slump and non-operating losses.
However, the company said it expects the DRAM correction to be short-lived, and that the industry would emerge from a supply glut in the second half of next year.
Net profit plunged 98 percent sequentially to NT$35.14 million (US$1.27 million) from NT$1.55 billion, the company said in a statement.
Photo courtesy of Adata Technology Co
On an annual basis, it plunged about 88 percent from NT$313 million.
Non-operating losses, including foreign-exchange losses, amounted to NT$294 million last quarter.
Earnings per share (EPS) slumped to NT$0.14 from NT$6.05 in the previous quarter and NT$1.37 a year earlier.
Gross margin slid to 10.5 percent from 18.2 percent in the second quarter and 10.51 percent in the third quarter last year.
In the first three quarters, net profit more than doubled to NT$2.19 billion from last year’s NT$1.04 billion. EPS jumped to NT$9.03 from NT$4.69.
Adata said it expects spot market prices of DRAM chips and modules to stabilize this quarter, which should help improve its gross margin.
“As the supply chain inventory looks stable and healthy currently, DRAM price declines should slow in the fourth quarter,” the company said.
With DRAM chipmakers expected to ramp up production of higher-density DDR5 chips next year, Adata said that DRAM capacity increase would be capped in the short term, as the new DRAM chips consume more wafer capacity than DDR4 chips.
The supply glut is expected to improve in the first quarter of next year amid PC replacement demand following Microsoft Corp’s launch last month of its Windows 11 operating system, the company said.
The DRAM industry would also be supported by growing demand for servers, 5G-related applications, electric vehicles and gaming PCs, as well as augmented-reality and virtual-reality devices, it said.
Increases in memory space for 5G smartphones and growing uptake of high-density SSD would benefit the company’s NAND flash business, it added.
Adata posted revenue of NT$3.32 billion for last month, up 3.71 percent from September, as its DRAM, SSD and memory card segments registered higher revenue growth compared with a month earlier. Last month’s revenue grew 14.94 percent from a year earlier.
DRAM was Adata’s biggest revenue source, contributing 46.53 percent last month, followed by SSD, which made up 34.5 percent.
The company expects revenue this year to soar to a 10-year high after revenue in the first 10 months increased 25.12 percent year-on-year to NT$32.7 billion.
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