Macronix International Co , the world’s biggest supplier of NOR flash memory chips, yesterday said that demand is surprisingly strong through next year, with some customers even seeking year-long contracts, as it rejected Morgan Stanley’s bearish view on memory stocks.

The Hsinchu-based company said that the growth momentum is also backed by new orders and new clients amid rising demand for servers, automotive, medical and industrial devices, as well as 5G-related applications, from the US, Europe and Japan.

In addition, Macronix is receiving orders transferred from rivals, whose factories were temporarily shut down due to natural disasters or other factors, it said.

“We are not affected by the uneven supply of components,” Macronix chairman Miin Wu told investors during an online media briefing. “Our book-to-bill ratio is so high that it surprises us.”

The company’s book-to-bill ratio remained above 1, while revenue has reached new highs over the past 10 months.

Macronix posted record revenue of NT$4.28 billion (US$153.58 million) last month, up 36.4 percent year-on-year.

“Demand for automotive devices has been increasing,” Wu said. “We are seeing some prominent companies, including those from Japan, are turning to Macronix for help, as their suppliers cannot provide any more chips.”

“We are seeing good business through next year,” he said, adding that Macronix has clinched long-term supply agreements at good prices.

Despite the strong revenue growth and rosy prospects, Macronix’s stock has fallen more than 17 percent to NT$37.65 yesterday from NT$45.45 on Aug. 5.

The company blamed the results on Morgan Stanley’s downgrade of its stock to “equal weight” along with other DRAM chipmakers.

In a research note titled “Memory: Winter is coming,” Morgan Stanley analysts cut Macronix’s target price to NT$44 from NT$54.

The researcher warned about a pullback in chip demand, as the industry is entering the late stage of an upcycle.

The price hikes enjoyed by chipmakers are likely to reverse next year, it said.

Macronix said that Morgan Stanley has mistakenly put NOR flash memorychip makers alongside DRAM chipmakers.

DRAM chipmakers might see some weakness due to component supply bottlenecks, but that is not the case for NOR makers, Wu said, adding that the bearish comments were groundless.

The outlook for NOR flash memory chips remains strong in the second half of the year, Wu said.

Automakers are likely to face a new headache with shortages of flash memory chips, he said.

Macronix shareholders yesterday approved a cash dividend distribution of NT$1.2 per common share.

That represents a payout ratio of about 41 percent based on the company’s earnings per share of NT$2.9 last year.

By: DocMemory
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