Elpida Memory Inc led shares of computer-memory chip manufacturers higher after a report in the Nikkei Shimbun that the Japanese company planned to raise prices, fueling speculation the industry was headed for a recovery.
Elpida, the world’s third-largest chipmaker, rose 1.1 percent to close at ￥1,099 in Tokyo after climbing as much as 4.5 percent. Samsung Electronics Co and Hynix Semiconductor Inc, the industry’s two biggest producers, gained in Seoul trading, while Nanya Technology Corp (南亞科技) and Powerchip Technology Corp (力晶科技) advanced in Taipei.
An increase would end an eight-month slide that forced Elpida to cut production and led analysts to project losses at smaller Taiwanese manufacturers.
Prices of the benchmark DRAM chip tumbled 63 percent from May through Monday amid a glut, according to data compiled by TrendForce Corp’s (集邦科技) DRAMeXchange.
“Prices of DRAM chips appear to have reached a bottom,” said Sam Hsieh (謝良武), a Taipei-based fund manager at Fuh Hwa Investment Trust Co (復華投信), who helps oversee the equivalent of US$7.8 billion. “Investors are more optimistic about the companies.”
Tokyo-based Elpida plans to raise DRAM prices by 10 percent as early as this month, the Nikkei reported, without citing anyone.
Elpida spokesman Hiroshi Tsuboi declined to comment on the report.
Park Hyun, a spokesman for Hynix, the second-largest DRAM maker after Samsung, declined to comment on whether the South Korean company has plans to raise prices. Nanya Technology said that if Elpida could successfully negotiate higher product prices later this month, it would take the hint and follow suit. Inotera Memories Inc (華亞科技), one of Nanya’s contractors, could also follow suit, market observers said.
Powerchip did not directly respond to the Elpida news, but the company has said DRAM demand was on the rise, as PC makers plan to launch new models in the second quarter of this year.
It also believed that DRAM prices would bottom out in the first quarter of this year.
Suwon-based Samsung rose 2.1 percent to 969,000 won, while Hynix climbed 2.8 percent. Nanya, Taiwan’s second-biggest DRAM maker, rose 1.5 percent and Powerchip advanced 3.5 percent.
Not all analysts see chip prices bottoming. Prices will probably tumble 45 percent this year because of oversupply, according to a report by market research ISuppli Corp on Wednesday last week.
“The gains were a knee-jerk reaction to the Elpida report,” MasterLink Securities Corp (元富證券) analyst Tom Tang said.
“The local DRAM sector had consolidated for a long time. I suspect the buying came from bargain-hunters trying to take advantage of low valuations in the sector,” Tang said.
However, Tang voice doubt that a 10 percent price hike would help local DRAM makers turn around in the short term amid lingering concern over weak global demand.
He said South Korea’s more advanced DRAM production process has helped its firms cushion the impact of falling product prices.
“But that’s not the case in Taiwan. The operating costs of local DRAM makers are much higher. Even if the 10 percent price hike is confirmed, it remains to be seen whether it can give them sufficient financial support,” he added.
He said it was too early to turn upbeat about their profitability this year as Taiwanese DRAM makers lack leverage to set prices and usually follow market trends set by their larger South Korean counterparts.
In the first three quarters of last year, Inotera and Nanya posted net losses of NT$5.99 billion (US$203 million) and NT$4.98 billion respectively, while Powerchip recorded a net profit of NT$12.24.
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