Adata Technology Co (????), the world’s second-largest memory module supplier, last year swung into its first annual loss in three years, dragged by an unspecified inventory write-down as memorychip prices tumbled.

The lackluster financial performance yesterday sent Adata shares down 4.73 percent to NT$39.3 in Taipei trading, versus no change in the TAIEX.

The memory module supplier reported losses of NT$178.97 million (US$5.8 million) for last year, reversing net profits of NT$1.86 billion in 2017.

Despite the losses, the company’s board of directors still approved the distribution of a cash dividend of NT$0.2 per common share.

In the quarter ending on Dec. 31 last year, Adata saw losses of NT$396 million, the effects of a gross margin squeeze.

Gross margin dipped to 5.23 percent last quarter from 6.67 percent in the third quarter of last year and 13.36 percent a year earlier.

“As DRAM and NAND flash memory chips are undergoing a new round of price corrections, the company decided to book an inventory write-down last year,” Adata said in a statement on Monday.

Adata said that as of the end of last year it had reduced inventory by half, compared with the same period in 2017 to NT$2.92 billion worth of products, causing its inventory to hit the lowest level in about nine years.

With inventory burden alleviating, the company said it is optimistic that its operations would develop in a “positive” way during the first two quarters of this year.

“Memorychip prices are to remain weak in the short term, but the market situation will hopefully recover in the second half of this year,” Adata chairman Simon Chen (???) said in the statement.

Adata has seen early signs of recovery, as revenue last month dropped only 0.77 percent year-on-year to NT$2.04 billion, the slowest pace since September last year. Shipments of DRAM and NAND flash products picked up last month, Adata said.

To better weather volatility in the memory industry, Adata is diversifying into new markets, including gaming PCs, industrial devices, electric motors and automotive devices, the statement said.

The new products carry higher gross margins and are to contribute revenue in the second half of this year, Adata said.

Over the next one to two years, the new products would account for a bigger share of total revenue and become driving forces, it added.

"If it opens exports for Italian companies, it is great. The only constraints are security, the control of Italians' data, and energy. I would not like someone to wake up on the other side of the world and turn off the switch," League leader Matteo Salvini said this week.

"If the Chinese want to invest in railways and ports, fine. What is important that control remains in Italian hands."

Francesco Sisci, a China expert currently working as a researcher at Renmin University in China, said the biggest problem with the deals with China is that Italy pursued them without properly keeping its allies informed.

"There was a lack of professionalism and political know-how. Whatever the deal is, they need to speak first with the Americans and the Europeans, agreeing to a common approach, then speak with China," Sisci said.

"Italy is part of NATO. It is part of the European Union and shares a currency. How do they not speak with their allies? It is crazy," he said.

By: DocMemory
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