DRAM shares register more than 7% decline

2012-08-06

TAIPEI--Shares of local dynamic random access memory (DRAM) makers came under heavy pressure Friday after product prices for July contracts registered a more than 7 percent decline amid a supply glut, dealers said.

“Even some market players, such as Japan-based Elpida Memory Inc., have started scaling back production to tackle the current down cycle. Demand remains suppressed, further pushing down product prices,” Mirae Asset Management analyst Arch Shih said.

According to a research report released by DRAMeXchange, the benchmark DDR3 2-gigabit DRAM chip's prices for July delivery fell US$0.09 (NT$2.7) or 7.69 percent from June to US$1.08.

The price decline sent the stocks of the local DRAM sector into a tailspin, with Nanya Technology Corp. closing down 5.56 percent at NT$1.87 (US$0.06) and Inotera Memories Inc. ending down 5.35 percent at NT$5.48.

The benchmark weighted index closed down 0.69 percent, at 7,217.51 points.

Shih said there were few signs that commodity DRAMs for personal-computer use would see a recovery any time soon.

“Although the market has high hopes that the launch of Microsoft's Windows 8 operating system will boost buying in PCs, hopes are merely hopes, and it remains to be seen whether PC sales will recover accordingly,” Shih said.

DRAMeXchange said in a research report that the slowdown in the third quarter would force the global DRAM industry to cut production in a bid to absorb the impact of the falling product prices.

The research report said that even if DRAM makers adopted the advanced 40 nanometer technology to cut costs, low pricing power was expected to cause losses for them.

Meanwhile, Nanya Technology posted NT$2.58 billion in sales for July, down 21.2 percent amid falling shipments and product prices. The July figure was the lowest in six months.

Affected by the fall in product prices, Inotera registered NT$3.04 billion in sales in July, down 7.2 percent from a month earlier and a three-month low.