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Revenues Soar At China's Memory Devices

China's Memory Devices shook off a seasonal slump to post its best-ever quarterly results.
SINGAPORE — China's Memory Devices shook off a seasonal slump to post its best-ever quarter, a sign that the firm may be gaining ground in its drive to challenge the giants of the global solid-state memory market.

The Singapore-listed company said Tuesday (Aug. 14) in a statement that sales for the second quarter of 2006 shot up 151 percent from 2005 to $142 million, while net profit rose 82 percent to $3 million.

Memory Devices executive director and CEO Steve Chen said supply constraints affecting DRAM modules, particularly DDR, as well as continued demand for flash products pushed memory prices up and provided a much-needed boost to what is traditionally the company's weakest quarter.

The firm expects its robust performance to extend into the third quarter, noting that the rollout of new MP3 players and mobile phone models should stabilize flash prices while persistent supply shortages meant prices for DRAM modules "are expected to continue to trend upwards."

Memory Devices is also counting on rapid growth in its Asian business. Chen said the company had recently begun sales to POTEVIO Group, China's biggest handset maker, and hoped POTEVIO would become "one of [its] major customers by this year-end."

The firm said it was still waiting for regulatory approval to complete a $96.8 million takeover of Taiwanese memory module maker TwinMOS, which boasts a significant presence in the U.S. and Europe. The planned merger is a key part of Memory Devices' plan to become the No. 2 player in the solid-state memory sector behind Kingston Technology.

"To succeed in this industry, you need size, market breadth and depth as well as good working capital management controls . . . after the proposed acquisition of TwinMOS, we will explore the India and Brazil markets together," Chen said.