Try the new FT.com

May 9, 2006 10:44 am

Samsung and Hynix raise flash chip prices

  • Share
  • Print
  • Clip
  • Gift Article
  • Comments

South Korean chipmakers are raising prices of Nand flash memory chips used in mobile digital consumer products for the first time this year.

Samsung Electronics and Hynix Semiconductor, which together control almost 70 per cent of the fast-growing flash memory chip market, said on Tuesday they raised the chip prices at the end of last month, encouraged by improving demand.

“We raised prices of some Nand flash products by a single-digit percentage as the market conditions were improving,” said Chu Woo-sik, senior vice-president at Samsung.

He added that demand was increasing, mainly from flash card makers, after a big price fall in the first quarter. Analysts estimate that flash memory chip prices have plunged about 65 per cent this year amid a supply glut.

Samsung reported a 25 per cent drop in first-quarter operating profit, hit by falling prices of memory chips and mobile phones. But Mr Chu expected stabilising chip prices would help boost profitability, as Samsung continues to cut production costs. The world’s largest memory chipmaker recently raised prices of some D-Ram products amid a supply shortage.

Samsung shares rose 0.92 per cent to Won661,000 on Tuesday and Hynix shares closed up 4.29 per cent at Won32,850, as analysts said the worst was over for the flash memory chip market.

“The market is still plagued by oversupply but demand is slowly increasing. I think the market has hit the bottom,” said Jae Lee at Daiwa Securities.

He forecast oversupply to ease in the third quarter, citing high price elasticity of flash memory chips. Sales of flash memory chips jumped 55 per cent last year to $10bn, according to World Semiconductor Trade Statistics.

The growth rate is slowing this year due to weaker-than-expected demand from MP3 player makers, such as Apple Computer.

Samsung expects sales to grow explosively once notebook computer makers replace hard disk drives with flash memory chips. “We started shipping flash memory chips for global notebook computer producers. That is a meaningful development,” said Mr Chu.

But the chipmaker is facing increasing competition in the lucrative market, with US groups Intel and Micron Technology forming a joint venture to produce flash memory chips.

Copyright The Financial Times Limited 2017. You may share using our article tools.
Please don't cut articles from FT.com and redistribute by email or post to the web.

  • Share
  • Print
  • Clip
  • Gift Article
  • Comments

EMAIL BRIEFING

Sign up to #techFT, the FT's daily briefing on tech, media and telecoms.

Sign up now

NEWS BY EMAIL

Sign up for email briefings to stay up to date on topics you are interested in

SHARE THIS QUOTE