Only Japan’s nuclear crisis prevented Taiwan’s two largest memory-chip makers from being the worst-performing stocks last year in the FTSE World Asia Pacific Index. Powerchip Technology Co. and Nanya Technology Corp. may struggle further as chips get even cheaper.
The CHART OF THE DAY shows Nanya and Powerchip shares both dropped more than 85 percent last year, exceeded only by Tokyo Electric Power Co.’s 91 percent plunge in the 983-company FTSE Asia gauge. The lower panel tracks Samsung Electronics Co., which has the biggest weighting in the index, and Gree Inc., a Tokyo-based provider of social-networking games, which was the top gainer.
“These chip companies are like walking wounded trapped in a vicious cycle,” said Mark Newman, an analyst at Sanford C. Bernstein & Co. in Hong Kong who has an “underperform” rating on Nanya. “The nuclear issue was a one-off, whereas the DRAM companies are facing an ongoing onslaught.”
Prices of dynamic random-access memory, or DRAM, the most-common semiconductor used in computers, fell 55 percent last year as a slowing PC market prolonged oversupply and prompted Nanya to post its eighth straight quarter of losses. Shares of Powerchip, based in Hsinchu, and Nanya, based in Taoyuan, will slump further, according to a consensus of analyst recommendations compiled by Bloomberg. “Sell” ratings outnumber “buy” on both Powerchip and Nanya, the data show.
Tepco, owner of the Fukushima nuclear power station that suffered a meltdown after an earthquake in March, has seen many brokerages suspend their coverage and ratings. Mizuho Securities Co. this week affirmed its “neutral” rating and its target price of 235 yen. Tepco closed at 209 yen yesterday.
Samsung, the world’s largest maker of DRAM, benefited from diversifying into profitable flash memory as well as mobile phones, helping shares of the Seoul-based company climb 11 percent. Gree rose 157 percent last year while the regional benchmark index declined 16 percent.