The price of computer memory chips on the open market has dropped below the level at which local manufacturers can make a profit, analysts said yesterday.
Market prices for mainstream dynamic random access memory (DRAM) chips -- used for short-term memory in devices as varied as computers and answer machines -- dipped below US$4 per chip for the first time to finish at US$3.80, according to the Taiwan-based online memory chip market dramexchange.com. Manufacturers need to be making US$4 to US$4.50 per chip to break even, analysts said.
"None of Taiwan's memory chipmakers can make a profit at US$3.80," said Rick Hsu (
Companies like Nanya Technology Corp (
The first quarter outlook appears gloomy for the sector. "Under the current spot price, we believe that almost all DRAM makers will post losses in the first quarter of 2003," James Huang, (黃建銘), an analyst at SinoPac Securities Corp (建華證券) said in a statement yesterday.
Nanya is poised to take the hit.
"The pricing of the spot market will definitely have an impact on us as between 25 percent and 30 percent of our volume is sold on the spot market," Nanya Vice President Charles Kau (
Kau stressed that contract prices do not move as quickly as spot prices, but said that the outlook for the next two quarters was "very uncertain."
Meanwhile, over at ProMos Technologies Inc (
In the run up to the holiday season, demand for memory chips increases and prices rise. As recently as October, 256Mb DDR DRAM chips were selling at over US$8.80 on the spot market.
This year the post-holiday slump in demand has been compounded by increased production at the world's largest memory chip makers, US-based Micron Technology Inc and South Korea's Samsung Electronics Co, creating what Hsu calls a "double-squeeze" on prices.
"We wouldn't be surprised if prices touched US$3 by late February, early March," Hsu said.
He expects all of Taiwan's DRAM makers to post losses in the first quarter and possibly even in the second quarter.
The weakness may continue.
"If weak DRAM prices linger until the second quarter, DRAM makers will be in difficulty again," Huang said. Over at Nomura, Hsu sees no light at the end of the tunnel before the second half of the year when new, faster chips should raise prices again.
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