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DRAM prices may rebound: report

The price for mainstream computer memory chips may bounce back to exceed US$1 per unit as soon as the end of this quarter, helped by Lunar New Year demand in China and a supply glut, from an 85 percent plunge over the past year, a Taipei-based market researcher said yesterday.

The chip price would also get some support from falling supply from local dynamic random access memory (DRAM) chipmakers this quarter as the nation's No.3 DRAM maker ProMOS Technologies Inc (茂德科技) planned to begin annual factory maintenance in the middle of this quarter, Taipei-based DRAMeXchange Technology Inc (集邦科技) said in its latest report.

Coupled with rising demand in the Chinese market, "It is highly likely the price for DDR2 will rebound to exceed US$1 to US$1.2 per unit," DRAMeXchange said.

The DRAM price has plunged to US$0.93 per unit on Dec. 31, compared to US$6.32 in the beginning of last year, according to the research house.

The price decline is expected to give local companies, led by Powerchip Semiconductor Corp (力晶半導體), deep losses in the fourth quarter, analysts said.

Powerchip may post record high losses of NT$7.1 billion (US$220 million) for last quarter, while its smaller rivals Nanya Technology Corp (南亞科技) and ProMOS Technologies may report NT$4 billion and NT$5.3 billion in losses, said Liu Szu-liang (劉思良), a DRAM industry analyst with Yuanta Core Pacific Capital Management (元大京華投顧).

"Their losses may narrow in the second quarter because of improvement in DRAM price. But I do not expect the companies will return to the black anytime soon as global rivals such as Samsung Electronics Co plan to expand production this year to gain market share," Liu said.

Shares of the nation's top DRAM makers -- Powerchip, Nanya and ProMOS -- jumped 1.98 percent to 3.32 percent yesterday in the wake of 3.3 percent improvement in the spot price over the past week.

Nanya Technology and Inotera Memories Inc (華亞科技), a DRAM joint venture with Infineon Technologies AG, are scheduled to release their fourth quarter earnings and to give their business outlook on Tuesday next week.

"If DRAM companies cut production, or capital spending for this year before the second quarter, the price for higher-density DDR2 1GB will have a big chance of rising 35 percent further to over US$2.5 apiece, helping those companies to return to profits," DRAMeXchange said.

The report said it would be more cost-saving for local firmss to make DDR2 1GB than DDR2 512GB and that demand for high-density memory chips was on the rise.
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