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Electronics Production | February 14, 2006

Nanya stronger than the market

In a year when worldwide DRAM revenue declined, and nine of the top-10 suppliers in the market suffered sales decreases, Nanya Technology Corp. in 2005 managed to expand its revenue by nearly 30 percent, and to improve its ranking by one position, according to a preliminary estimate from iSuppli Corp.
Nanya of Taiwan posted DRAM sales of $1.5 billion in 2005, up 28 percent from $1.2 billion in 2004. The company ended 2005 with a market share of 6.1 percent, up from 4.5 percent in 2004, putting
Nanya in sixth place, up from seventh in 2004. Nanya in 2005 became Taiwan's largest DRAM supplier, surpassing its domestic rival, Powerchip Semiconductor Corp.

Nanya's strong performance contrasted sharply with the weak results for the entire DRAM market, which declined to $24.8 billion in 2005, down 6.4 percent from $26.5 billion in 2004. Revenue was reduced by the decline in the DRAM Average Selling Price (ASP), which reversed a vigorous rise in unit shipments. Global per-megabyte unit shipments of DRAM in 2005 rose by 57 percent-but the ASP fell by 40 percent. "Nanya benefited from a 126 percent increase in its DRAM bit shipments
for the year, mainly due to the rapid production ramp-up by its manufacturing partner, Inotera Memories Inc.," said Nam Hyung Kim, director and principal analyst with iSuppli. DRAM market leader Samsung Electronics Co. Ltd. posted the second-best performance of all suppliers ranked by iSuppli in 2005, limiting its sales decline to 0.9 percent. The South Korean memory giant achieved DRAM revenue of $7.46 billion in 2005, down from $7.53 billion in 2004. This allowed Samsung to increase its market share in 2005 to 30.1 percent, up from 28.5 percent in 2004. Infineon Technologies AG had the biggest decline among the top-five DRAM suppliers in 2005, with its revenue falling to $3.2 billion, down 12.4 percent from $3.68 billion in 2004. However, the company maintained its fourth-place ranking from 2004. The table attached presents iSuppli's preliminary ranking of the top-10 DRAM suppliers in 2005 and in the fourth quarter. Poor DRAM market conditions persisted in the fourth quarter of 2005, with only two suppliers achieving sales growth compared to the third quarter: Nanya and Japan's Elpida Memory Inc. With all the other DRAM suppliers suffering sales decreases, fourth-quarter DRAM revenue declined to $6.1 billion, down 4 percent from $6.37 billion in the third quarter. However, with a stronger-than-expected start to this year, the global DRAM market could be headed for better conditions in 2006 than it faced in 2005, iSuppli believes. Suppliers are ramping up for vigorous competition this year.

Promos Technologies of Taiwan is executing a recovery strategy to turn around from its 23.6 percent decline in DRAM revenue in 2005. The company plans to institute a more aggressive ramp-up of its 300mm production. Meanwhile, Elpida and Infineon in 2006 are expected to increase their DRAM market shares at the expense of their competitors, Samsung, Hynix and Micron, which are becoming increasingly focused on NAND flash memory. More information on the DRAM market can be found in Kim's report entitled, Swing Factors to Impact 2006 DRAM Growth.

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