Chipmakers Relieved on Price Stabilization
By Kim Yoo-chul
Staff Reporter
The semiconductor industry is heaving a sigh of relief over stabilizing prices, with key makers hoping for a rebound.
Not all analysts and industry watchers are sure whether it means an immediate turnaround in the market, citing a lower demand for electronics products due to the bad global economy and cutbacks in output.
Prices of standard dynamic random access memory (DRAM) chips widely used in personal computers have remained flat without further drops, according to data from DRAMeXchange.
The chip price tracker and research firm said the contract price of 1Gb DDR2 DRAM chips as of Jan. 8 was $0.81 per unit ― the same price range as in Dec. 22, last year.
DRAMeXchange said it was now worth hoping for a rebound in DRAM chip prices, if demand for personal computers recovered.
"Prices for the standard chips have bottomed out. Now, it is nearly time to raise our contract price for DRAMs," a Samsung Electronics spokesman said, Wednesday.
The spokesman said contract DRAM prices hit record lows in December resulting in hefty losses for many of the world's producers. Samsung is the industry leader in computer memory chips.
Sources say the company plans to raise its prices for DRAMs sometime in January, though its larger customers were opposed to a price hike given the bearish market.
Hynix CEO Kim Jong-kap also said he believes the global demand for memory chips will rise from the second half as the market has experienced "enough corrections" over the past few years.
A high-ranking Hynix official told The Korea Times, however, that the world's No. 2 DRAM chipmaker doesn't have any immediate plan to hike its contract prices for DRAM chips to customers.
Another hopeful sign seen in the industry is the continued efforts to slash output by chipmakers, accelerating industrial consolidation.
Samsung plans to slash its investment in chips by as much as half, this year. The company invested some six trillion won in memory chips in 2008.
Hynix, which invested 4.8 trillion won in chips in 2007, will invest just one trillion won to weather the downturn. Taiwanese chipmakers were seriously considering forming an alliance as their last card for survival.
"Samsung, Hynix, Elpida and a consolidated Taiwanese firm will realign the market," said a high-ranking industry official, expecting some less tech-savvy makers to exit.
"Every consolidation step in the sector is likely to have a positive impact on DRAM prices. Although that's the scenario that Qimonda needs most, chances are very low for the German chipmaker to survive," an analyst at Goodmorning Shinhan Securities said.
"Samsung will continue to ramp up capacity, threatening Qimonda," the analyst said.
An unprecedented downturn in the market for DRAM chips, used mainly in personal computers, has pummeled Hynix and its rivals such as Qimonda and Taiwan's Powerchip Semiconductor, forcing them to cut back on output and seek outside funding.