Growing Demand for Data Storage Sends Taiwan Stock Up 204 Percent

Yu-Huay Sun (Bloomberg) -- A Taiwanese maker of compact discs and portable hard drives has captured the attention of investors on plans to expand into data storage for cloud computing.

Ritek Corp. has surged 204 percent since announcing on May 7 an agreement to manufacture discs that can hold as much as 300 gigabytes of data for Panasonic Corp. That’s the best performance among the almost 900 members of Taiwan’s benchmark Taiex.

"The deal is an indication Taiwanese are getting more of the optical disc market, where demand could be boosted by the need to store data," said Richard Lin, a vice president at Taipei-based Reliance Securities Investment Consultant Co. "Investors are hopeful Ritek can turn around in 2019 or 2020 after years of losses, though that’s uncertain right now."

Mass production of the discs will start in July, according to Ritek’s statement, and the two companies plan to develop versions that can hold 1 terabyte in the future.

After the stock surged to a more-than decade high, the rally is looking overheated. The company’s relative-strength index has risen to 89, the most among Taiex members.