Samsung, Hynix Beset by Falling Chip Prices
By Kim Yoo-chul
Staff Reporter
Samsung Electronics and Hynix Semiconductor, which collectively dominate nearly 50 percent of the global dynamic random access memory (DRAM) chip market, are concerned over potential losses in the fourth quarter due to a drop in prices of memory chips.
According to data from DRAMeXchange, a market research firm, the average price of an outdated 512-megabyte DRAM chip fell below $1 as of early this month, down over 90 percent from a year earlier.
Moreover, the average price of the much more profitable NAND flash memory chips of 8-gigabytes fell by nearly 17 percent from a month earlier to $4.3, according to industry estimates.
DRAM chips are used in personal PCs, while the advanced NAND flash chips are used to make high-end electronic gadgets such as MP3 players and car navigation systems.
``We don't rule out the possibility of posting operating and net losses in the fourth quarter due to highly unfavorable market conditions,'' Hynix spokesperson Park Hyun told The Korea Times, Thursday.
``We expect chip prices to rebound during the second quarter of next year, given the ongoing shift to high-end chips and falling production of unprofitable and volatile low-end chips,'' he added.
The remarks came after Hynix recently told investors that the average selling price of its main products had fallen more rapidly than expected and raised the possibility of recording operating and net losses.
Samsung Electronics, which has ``buffers'' to tackle price drops ― LCD and handsets ― unlike chip-focused Hynix, is also worrying about the possibility of disappointing operating profits.
``DRAM prices fell below the `final line' and we expect smaller-than-expected operating profits in the semiconductor sector,'' an official from Samsung said.
``Hynix will turn around next year after losses in the fourth quarter, while Samsung is also forecast to suffer disappointing results,'' an analyst from a local brokerage firm said.
Market analysts say the traditional difficulties in the memory chip sector could flare up again.
``The market is maturing and it is time for further consolidation,'' the analyst said.