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Asia DRAM Report: New Yr Celebration Seen Short-Lived
TAIPEI (Dow Jones)--Makers of computer memory chips got a pre-Lunar New Year gift over the past week in the form of a slew of new orders from China, but the resulting surge in spot prices for their chips is unlikely to last through the upcoming holiday. ADVERTISEMENT Demand from computer makers ahead of the holiday, which is celebrated throughout Greater China and parts of Southeast Asia, pushed prices of dynamic random access memory chips up more than 6% since last Monday. The most widely-used DRAM, 256-megabit double data rate chips that run at 333 megahertz, rose to $3.92 Monday from $3.69 a week ago, according to DRAMeXchange, an online broker for the chips. "This is demand from China, for the Lunar New Year. It's only temporary," said Rick Hsu, semiconductor analyst at Nomura Securities in Taipei. "Normally, demand comes from everywhere in the world, but right now it's only coming from China." Historically, DRAM prices decline after Christmas as personal computer sales slow. But in recent years, the Lunar New Year has added a dash of buying from China to help ease the post-Christmas hangover. The extra demand has helped boost chipmakers' sales in January, the traditional beginning of the slow season. The trouble is that after Lunar New Year, DRAM price declines begin again in earnest. Nam Hyung Kim, a senior analyst at market researcher iSuppli Corp., predicts spot DRAM prices may fall to a low of $3 per chip in mid-February. He has cut his rating of the overall DRAM market to "neutral" from "optimistic," despite the recent rise in prices. "Most DRAM traders and suppliers have confirmed there is a pickup in demand due to the upcoming holiday. However, sales on the spot market indicate that this demand is not strong enough to bring a significant improvement in DRAM revenue or pricing," he wrote in a Friday report. But the surge last week did cause equity traders to bid up share prices of some of the DRAM makers most likely to benefit from the rising spot market. Shares of Taiwan's Powerchip Semiconductor Corp. (5346.OT) rose 2.2% Monday to NT$19, while rival ProMOS Technologies Inc. (5387.OT) added 2.3% to NT$13.4. In South Korea, shares of Hynix Semiconductor Inc. (000660.SE) closed up 1.4%, or KRW100, at KRW7,260 ($1=KRW1,176). Investors that trade DRAM shares tend to buy and sell in line spot chip price movements. In coming days shares and chips could see more gains. In its weekly price forecast, DRAMeXchange said: "Many marketers are optimistic that (DDR-DRAM) prices will remain flat or slightly up for the coming week." Table Of Average Weekly DRAM Spot Prices - By Dan Nystedt, Dow Jones Newswires; (8862) 2502-2557; dan.nystedtdowjones.com (Dan Nystedt has covered Taiwan's technology sector since 1999.)
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