Taipei, May 4 (CNA) Shares of Nanya Technology Corp. and Inotera Memories Inc., two memory chip manufacturing arms of conglomerate Formosa Plastics Group, moved sharply higher Friday morning after they reported double-digit growth in April sales, dealers said.
The market expects prices of dynamic random access memory (DRAM) chips to continue to rebound on hopes that demand for personal computers will recover quarter by quarter after the slow-season effects of the first quarter fade, dealers said.
As of 11: 25 a.m., shares of Nanya Technology had climbed 7 percent, the maximum daily increase, to NT$2.31 (US$0.08), with 1.12 million shares changing hands. Inotera shares had risen 4.0 percent to NT$8.32 on trading volume of 11.51 million shares.
The benchmark weighted index was up 0.38 percent at 7,688.34 points.
"Following recent corrections, the two stocks reacted positively to the April sales data as bargain hunting emerged," Horizon Securities analyst Benson Huang said.
Nanya Technology reported Thursday NT$3.41 billion in sales for April, up 14.3 percent from a month earlier. The April figure was also an 11-month high.
For its part, Inotera recorded a 19.1 percent month-on-month sales increase in April, with total revenue of NT$3 billion, the highest in eight months.
"To my knowledge, Nanya Technology enjoyed a 3.5 percent rise in its average selling price in April,” Huang said. “I expect the uptrend will continue since the PC industry bottomed out in the first quarter."
With the launch of Intel's Ivy Bridge processor and Microsoft's Windows 8 operating system, demand for PCs is expected to grow, which in turn will boost the need for the commodity DRAMs that the two Taiwanese firms specialize in, Huang said.
Contract DRAM prices are likely to recover further in the second quarter on the back of higher shipments, and prices may rise by as much as 10 percent in May, according to Nanya Technology.
However, Huang said that although DRAM prices are rebounding, the two companies are unlikely to make a turnaround in their profitability any time soon.
"The two companies are expected to incur losses for this year, although the losses will be narrower than last year because of improving market conditions," Huang said. "They are faced with strong competition as the global DRAM market continues to be dominated by South Korean firms such as Samsung Electronics Co."
In the fourth quarter of last year, Samsung and Hynix Semiconductor Inc. took an almost 70 percent market share, according to a DRAMeXchange report.
"Shares of Nanya Technology and Inotera could remain volatile amid concerns over fierce competition," Huang said.
(By Jackson Chang and Frances Huang)