For the second time in two weeks, Hynix Semiconductor Inc raised prices of its memory chips by up to 20 percent, a move analysts said would help ease the company's financial crisis.
But analysts said the effect of the price hikes would be short-lived without a recovery in worldwide demand for dynamic random access, or DRAM, memory chips.
"It is welcome news but the recent price hikes owed in great part to a drop in supplies, not by an increase in demand," said Simon Woo, an analyst at Hyundai Securities Co.
Woo said that several money-losing global chipmakers, including Hynix and Japan's Toshiba Corp, Hitachi Ltd and NEC Corp, have recently reduced production.
Hynix, the world's third-largest chipmaker, raised its memory chip prices by up to 20 percent in early December, its first increase since September last year. It again increased prices by 10 to 20 percent last week, said Kang In-young, company spokeswoman.
Hynix's long-term contract price for 128-megabit chips stood at US$1.32 in early December, up from US$1.20 in November. The company refused to reveal the current price. The industry leader, Samsung Electronics Co, also raised its long-term contract prices of DRAM chips by 10 to 15 percent over the weekend. There was no immediate report of price hikes by Micron Technology Inc of the US, the world's second-largest memory chipmaker.
Hynix and Samsung officials said the price hikes were to narrow the widening gap between spot and contract prices. Yesterday, the spot market price of a 128-megabit DRAM chip was quoted at US$1.80, up 30 percent from last month. It sold for US$6.80 a year ago.
The price of a 128-megabit DRAM chip -- the most widely marketed chip -- stayed well below US$1 most of this year, a price industry officials say is well below its production cost.
Hynix sells about 30 percent of its memory chips to large personal computer manufacturers, including International Business Machines, Compaq and Gateway. The rest are sold to smaller electronics manufacturers and on the spot market.
Hynix has been in deep financial trouble with debts of more than US$6 billion. It lost nearly US$3 billion in the first nine months of 2001.
Hynix is currently in talks with Micron to form a strategic alliance which industry officials say could lead to a merger. The two companies would have a combined global share of 38 percent. Samsung's global market share is estimated at 30 percent.
Hynix's problems worsened this year amid sagging global demand for memory chips. The company has been bailed out several times in the past two years.
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