UPDATE: Hynix Stops DRAM Chip Supply To Global Spot Market

UPDATE: Hynix Stops DRAM Chip Supply To Global Spot Market

(Adds analyst comment, quote from Samsung Electronics) By In-Soo Nam Of DOW JONES NEWSWIRES SEOUL (Dow Jones)--South Korea's Hynix Semiconductor Inc.

(000660.SE),said Thursday it stopped supplying dynamic random access memory chips to the global spot market in September as part of its efforts to support falling prices.

"As of now, we can't say when we'll resume," said Hynix spokesman Hyun Park. Hynix, which supplies about 15% of its DRAM chip output to the spot market, will channel more chips to contract clients such as personal computer makers, he said. The move will help buttress falling spot market DRAM chip prices and meet rising demand from contract clients, he added. Hynix, the world's second-largest maker of computer memory chips by sales, accounts for about 20% of the global DRAM market. Samsung Electronics Co.

(005930.SE), the world's largest memory chip maker, declined to say if it has also stopped supplying DRAM chips to the spot market. "We're doing our best to ensure a stable supply of DRAM chips to our clients in a timely matter," said Eun Hee Lee, a Samsung spokeswoman. Weaker-than-expected global demand and high inventory have pushed prices to this year's lowest levels. The average spot price of the mainstream DRAM chip - a 512-megabit double data rate two chip that runs at 667 megahertz - was $1.45 Thursday afternoon, down 62% from $3.84 in early January, according to DRAMeXchange, an online chip clearing house based in Taiwan. The problem has been worsened by a reluctance to cut production. Hynix Chief Executive Jong-Kap Kim last week attributed the current DRAM chip oversupply to aggressive output from rivals in Taiwan.

At the same time, however, he said Hynix wouldn't cut output.

"The Hynix move signals that the current spot DRAM prices have reached the point where even market leaders feel threatened," said Min Hee Lee, an analyst at Dongbu Securities. DRAM chip prices are likely to stabilize in coming weeks, but uncertainty remains as the industry enters a low-demand season, Lee said.

"If prices fall further toward the end of the year, chipmakers will seriously have to consider an output cut or reduction in plant investment," he said. Hynix's Park said Thursday the company plans to increase output of 1-gigabit DRAM chips to meet rising demand for high-capacity chips. Hynix will raise the portion of the 1GB chips to 60% of its total DRAM output by the end of this year, from the current 10%, said the spokesman. Shares of Hynix rose 6% to close at KRW30,950 in Seoul Thursday, while Samsung finished 4.5% higher at KRW558,000.

The broader market closed up 1.4%. By In-Soo Nam, Dow Jones Newswires; 822-721-0583; In-Soo.Nam@dowjones.com -Edited by Matthew Oakley (MORE TO FOLLOW) Dow Jones Newswires
From: FXPR.com