Fri, Sep 02, 2005 - Page 10 News List

Market watcher expects memory-chip prices to rise

By Lisa Wang  /  STAFF REPORTER , WITH BLOOMBERG

Prices of computer memory chips are expected to pick up moderately in the final quarter of the year boosted by seasonal demand for computers, Taipei-based market watcher DRAMeXchange said in its latest report.

"But the upward strength would be weaker as demand bit growth should lack behind supply bit growth by 4.4 percentage points in the fourth quarter," said Judy Chen, an official of Marketing Intelligence Team under DRAMeXchange, in the report released on Wednesday night.

The rebound in chip prices would first be driven by back-to-school demand this month.

The market watcher projected that first-tier local motherboard makers will report a quarter-on-quarter 8 percent shipment growth this month and the top six notebook contract makers should also see a 9 percent growth in shipments.

Chen did not give details about the price rise. The positive outlook, which is in line with most industrial players' forecasts, would be a relief for most memory chip makers.

Powerchip Semiconductor Corp (力晶半導體), Taiwan's biggest memory chipmaker, told investors that it expected the chip price to bounce back to around US$3 in the second half of the year.

The DRAM prices slid to below the average production cost of US$2.6 in the April to June quarter, DRAMeXchange said. Industrial laggards already started to feel the pinch of a price plunge in the first half of this year, it said.

But Powerchip had its stock recommendation reduced by UBS AG to "neutral 2" from "buy 2," which cited concerns about an oversupply of computer-memory chips and falling prices.

UBS also lowered its rating on Nanya Technology Corp (南亞科技) to "reduce 2" from "buy 2," analysts Jonathan Dutton, Kang-Ho Chong, Christian Dinwoodie and William Dong wrote in a report published on Wednesday.

Contract prices of so-called dynamic random access memory chips may reach a peak of US$2.75 in the first half of this month and fall from that level, UBS forecast. "Continued high oil prices" may also sap global demand for semiconductors, the brokerage said.

"As we approach the seasonal peak for DRAM demand, we believe the risk/reward for DRAM stocks is set to deteriorate over the next three to six months," the UBS analysts said in the report.

Shares of Powerchip Semiconductor fell NT$0.1, or 0.5 percent, to NT$20.1 while those of Nanya Technology was down NT$0.1, or 0.5 percent, to NT$20.2 on the Taiwan Stock Exchange on Wednesday. The stock market was closed yesterday because of Typhoon Talim.

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