Shares of Taiwan-based DRAM memorychip makers came under heavy pressure yesterday on reports that SK Hynix Inc, the second-largest DRAM supplier in the world, plans to build a new plant in South Korea.
The reports have led to worries that when the new plant becomes operational, global DRAM supply will increase, causing a reduction in product prices. The speculation has left many investors cautious about the DRAM market outlook, dealers said.
Concerns over a DRAM supply glut prompted investors to dump shares of US-based memorychip maker Micron Technology Inc on Wall Street overnight, and this added downward pressure on major local suppliers, they added.
Shares of Nanya Technology Corp (南亞科技) and Inotera Memories Inc (華亞科技) fell 3.06 percent and 4.76 percent respectively, closing at NT$3.80 and NT$20.00 yesterday.
“The Hynix reports did surprise the market. However, many investors simply seized on the report to lock in the gains posted by these DRAM stocks in recent sessions,” Asia Securities Investment Consultant (亞洲投顧) analyst Chang Chih-cheng (張智誠) said.
“After today’s plunge, the two stocks have become technically weaker,” Chang said.
According to the news report, Hynix is planning to invest at least US$3.8 billion to build a new plant in South Korea, with construction scheduled to begin next year. The report said the new factory is expected to start production in 2015 at the earliest to tap into the growing demand for mobile devices.