An executive from Taiwan's third-largest memory chipmaker said the company agreed with rivals to withhold chips from the market in a bid to halt a month-long slide in memory-chip prices.
"We're trying to encourage a price of US$3," Mosel Vitelic Inc (茂矽) Vice President Thomas Chang (張東隆) said in an interview, without naming the companies involved. "That's the consensus."
The spot market price of 128Mb dynamic random access memory (DRAM) chips rose this week for the first time in a month after slumping to a 12-month low of US$2.60 last Friday. It had almost doubled at the start of the year to a peak of US$4.48 on March 11.
Mosel may have found allies among other Taiwanese companies, which rely more heavily on the spot market than rivals in South Korea and the US.
There is also media speculation that US-based Micron Technology Inc, the No. 2 producer in the world, may have provoked Asian firms into banding together to support DRAM prices by dumping chips after talks to buy South Korea's Hynix Semiconductor Corp flopped.
Micron "released about 50 percent of its inventory" after talks to merge with Hynix collapsed on May 2, Chang said.
Hynix needed stable memory chip prices in order to bring in fresh capitol, necessary to pay back creditors for two multi-billion dollar loans it took out last year, according to Richard Gordon, memory-chip analyst at Dataquest Inc, the market research firm. Micron may have then followed by dumping chips in order to push DRAM prices below cost and negate any possible profits for Hynix, he said.
Mosel's Chang said the decision to support prices didn't come at a meeting of suppliers and declined to say when it occurred.
"You don't need to have a meeting," Chang said. "You just need to have a phone call. Everybody knows each other. We just said `try not to sell below US$3.'"
The shares of Mosel rose as much as NT$0.25, or 1.8 percent, to NT$14.55 in afternoon trading. The stock was the fourth-most actively traded by value on the TAIEX yesterday.
Taiwanese manufacturers such as Mosel, which together held less than 10 percent of the US$11.9 billion DRAM market last year, will be hard pressed to prop up DRAM prices, some investors said.
"The likelihood of an OPEC-style cartel in this business is limited," said Devan Kaloo, who counts shares in Samsung among the US$3.5 billion he helps manage at Aberdeen Asset Management Ltd.
Samsung Electronics, the DRAM market leader with 27 percent last year, dismissed the notion of industry price-fixing. "It's nonsense," said Kevin Jeong, a spokesman for the South Korean company.
Micron holds 19 percent of the memory-chip market, while Hynix has 14.5 percent and Mosel has 1.7 percent, according to Dataquest Inc.
Kaloo said the big three companies in the sector probably won't join efforts to limit sales.
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