Shares of Samsung Electronics Co and Toshiba Corp fell on concern a new venture by Intel Corp and Micron Technology Inc to make chips for iPod music players and digital cameras will increase price competition.
Samsung, the world's largest maker of NAND flash memory chips, fell 5 percent, while third-ranked Hynix Semiconductor Inc dropped 8.3 percent in Seoul. Toshiba, the No. 2, slid 8.8 percent, the biggest decline in 14 years in Tokyo.
The venture is targeting the fastest-growing segment of the US$17.3 billion market for flash memory, which stores music and video files in handheld gadgets. Apple, which already granted the companies a contract for iPod chips, may encourage competition to seek lower prices from suppliers.
PHOTO: AP
"This tipped the scale in a seller's market in favor of buyers and could have a negative impact on Samsung and Toshiba's pricing power," said Nick Ouyang (
Intel, whose microprocessors run more than 80 percent of the world's personal computers, is teaming up with Micron, the fifth-biggest maker of NAND chips, to accelerate its push into consumer electronics chips.
The companies will contribute US$1.2 billion each initially to the venture. NAND is cheaper to make than the NOR chips currently produced by Intel. NOR allows phones to read data more quickly than NAND, but is slower at writing large music and picture files.
Samsung and other memory chipmakers are counting on rising NAND demand to drive earnings growth as sales of computer chips known as dynamic random access memory (DRAM) are forecast to shrink for a second year next year. The market for NAND flash will rise 23.5 percent next year, compared with 6.1 percent for NOR, the Semiconductor Industry Association said last week.
"There are no winners among chipmakers, only the consumers win," said Yoshiharu Izumi, an analyst at JP Morgan Asia in Tokyo.
Suwon, South Korea-based Samsung had 50.2 percent of the NAND market in the third quarter, Toshiba of Japan had 22.8 percent. Micron was fifth, with 3.4 percent and sales rose fivefold in the period, according to ISuppli Corp.
Shares of Intel rose 0.04 percent to US$25.26 in US after-hours trading, while Micron gained 0.1 percent to US$14.20.
Competitor SanDisk Corp, which works with Toshiba, dropped 17 percent to US$46.84 on the NASDAQ stock market.
Toshiba, which makes 80 percent of its operating profit from its chip business, mainly from NAND flash, "is standing on one leg," said Yoshihiro Shimada, an analyst at Macquarie Securities Ltd in Tokyo.
The venture will be 51 percent owned by Boise, Idaho-based Micron, and 49 percent owned by Intel. They will fund the IM Flash Technologies LLC venture with cash, notes and assets and will each contribute an additional US$1.4 billion over the next three years.
Initial production is expected in early 2006, at Micron plants in Boise; Manassas, Virginia, and Lehi, Utah. Intel and Micron each entered into separate long-term agreements to supply Apple with a significant portion of each of their share of IM's output. Apple will prepay US$250 million each to Intel and Micron.
Apple agreed to buy chips for its iPod players from the new company as part of US$1.25 billion in purchases announced yesterday.
‘ABUSE OF POWER’: Lee Chun-yi allegedly used a Control Yuan vehicle to transport his dog to a pet grooming salon and take his wife to restaurants, media reports said Control Yuan Secretary-General Lee Chun-yi (李俊俋) resigned on Sunday night, admitting that he had misused a government vehicle, as reported by the media. Control Yuan Vice President Lee Hung-chun (李鴻鈞) yesterday apologized to the public over the issue. The watchdog body would follow up on similar accusations made by the Chinese Nationalist Party (KMT) and would investigate the alleged misuse of government vehicles by three other Control Yuan members: Su Li-chiung (蘇麗瓊), Lin Yu-jung (林郁容) and Wang Jung-chang (王榮璋), Lee Hung-chun said. Lee Chun-yi in a statement apologized for using a Control Yuan vehicle to transport his dog to a
Taiwan yesterday denied Chinese allegations that its military was behind a cyberattack on a technology company in Guangzhou, after city authorities issued warrants for 20 suspects. The Guangzhou Municipal Public Security Bureau earlier yesterday issued warrants for 20 people it identified as members of the Information, Communications and Electronic Force Command (ICEFCOM). The bureau alleged they were behind a May 20 cyberattack targeting the backend system of a self-service facility at the company. “ICEFCOM, under Taiwan’s ruling Democratic Progressive Party, directed the illegal attack,” the warrant says. The bureau placed a bounty of 10,000 yuan (US$1,392) on each of the 20 people named in
The High Court yesterday found a New Taipei City woman guilty of charges related to helping Beijing secure surrender agreements from military service members. Lee Huei-hsin (李慧馨) was sentenced to six years and eight months in prison for breaching the National Security Act (國家安全法), making illegal compacts with government employees and bribery, the court said. The verdict is final. Lee, the manager of a temple in the city’s Lujhou District (蘆洲), was accused of arranging for eight service members to make surrender pledges to the Chinese People’s Liberation Army in exchange for money, the court said. The pledges, which required them to provide identification
INDO-PACIFIC REGION: Royal Navy ships exercise the right of freedom of navigation, including in the Taiwan Strait and South China Sea, the UK’s Tony Radakin told a summit Freedom of navigation in the Indo-Pacific region is as important as it is in the English Channel, British Chief of the Defence Staff Admiral Tony Radakin said at a summit in Singapore on Saturday. The remark came as the British Royal Navy’s flagship aircraft carrier, the HMS Prince of Wales, is on an eight-month deployment to the Indo-Pacific region as head of an international carrier strike group. “Upholding the UN Convention on the Law of the Sea, and with it, the principles of the freedom of navigation, in this part of the world matters to us just as it matters in the
RSS