|Issued on : 15-05-2003|
|Commercial Times：ADATA, Taiwan's DRAM Module King|
|Chairman Simon Chen: Launches products before itscompetitors and successfully maximizes profits|
Selling products with its own brand “ADATA” throughout the world, the professional DRAM module company, ADATA Technology Co., Ltd., ranks NO. 176 among the top 1,000 manufacturers, NO. 10 in terms of Return on Equity (ROE), and <> NO. 8 for highest sales revenue growth by the May 2002 issue of Common Wealth Magazine. Overall, ADATA’s performance is at the top of all DRAM companies. For ADATA to become the most profitable DRAM module company in Taiwan, its Chairman Simon Chen’s expertise in funds management, distribution network, and inventory control is highly essential. Below is a summary of the interview with Simon Chen.
What is the key for any DRAM module company to outperform its competitors? And how is ADATA doing?
Upper stream memory manufacturers sometimes have to invest a large amount of money, often with capitals as high as NTD$10 billion. When the economy is good, these manufacturers can easily make high profits, but during economy down turns, they sometimes face the risk of high loss. On the other hand, DRAM module companies don’t need large production sites or facilities, and in Taiwan, DRAM module companies’ highest capital is only NTD$2 billion. Therefore, with stable supply and technical skills integration, as well as strict accounts receivable and inventory control, DRAM module companies usually can make a profit easier. ADATA’s EPS last year was NTD$13.05.
What is ADATA’s prediction about the DRAM market this year? And how does it plan its production capacity in reaction to this prediction
Last year, DRAM market was not doing very well for the first half of the year.This year, though an improvement was expected to show, <> the DRAM price drop in Q1 and SARS occurredin Q2<>. However, although it is hard to predict what is going to happen in Q3 and Q4 with the effect of SARS, the market is expected to perform better than Q1 and Q2. In terms of capacity planning, ADATA presently hasthree production, with monthly production volume of 400,000 to 450,000 pieces. Along with its other five outsourced production lines, ADATA’s total monthly production volume is about 900,000 pieces.
Facing a period of low profit, how does ADATA sustain its high profitability?
It is very important to create value through branding strategies. ADATA continuously develops high quality products to accumulate brand awareness, and <> its brand loyalty even exceeds some of its competitors who had been in the industry for a longer time. When the branding strategy starts to work, production costs can be lowered to increase profit margin. For example, ADATA launched the DDR400 only after Samsung, and since there were few competitors in that market, higher profits were achieved. ADATA’s DDR450 was launched at the CeBIT show in March and was expected to dominate the market for a while.
What is ADATA’s future product development plan? And what is its main consideration?
ADATA has already established a Flash memory business unit, producing Flash memory cards and other storage devices. This year, the Flash memory business unit’s sales revenue is about NTD$1.5 billion and is expected to exceed that of DRAM modules in three years. In addition, under the anticipation that TFT-LCD monitors will replace the traditional CRT ones in about three year’s time, ADATA has also ventured into the TFT-LCD display market with secure suppliers from panel manufacturers such as Samsung, Hannstar, and Quanta Display.