The stock price of domestic chip-maker Inotera Memories Inc. hit a new high for the year on the TAIEX yesterday amid recent DRAM price hikes and a recommendation from Morgan Stanley Securities.

Dynamic random-access memory (DRAM) is a type of random-access memory that stores each bit of data in a separate capacitor within an integrated circuit.

 Morgan Stanley Securities raised the company's rating by two notches and increased the target price to NT$9.8. Previous forecasts for the local DRAM market were too pessimistic and needed to be corrected, according to the investment bank.

Although the sluggish demand for PCs in the first quarter was well anticipated by the market, the worries about PC DRAM oversupply can be eased due to shortages of mobile DRAM, said Morgan Stanley Securities.

 Strong demand for mobile DRAM from the smartphone sector has consumed a large portion of standard DRAM capacity, pushing PC makers to seek sufficient supplies of memory chips from DRAM module makers.

 A DRAM supply shortage is expected to continue in the second half of this year, with contract prices expected to rise 33 percent from US$1.28 in March to US$1.7 in the second half, while 2014 may see another 10-percent price hike, said Morgan Stanley Securities.

 Inotera Memories, a major PC DRAM maker in Taiwan, as well as other manufacturers within the industry, are forecast to benefit from this market trend and their business model, said the investment bank.