Published : Jan. 20, 2020 - 15:13
(Yonhap)
Spot market prices for DRAM chips are surely on a rising course as they went up for 11 straight days, industry data showed Monday, boding well for South Korean chipmakers.
The spot price of 8-gigabit DDR4 DRAM, a benchmark price for the category, reached $3.34 as of last Friday, according to data from market tracker DRAMeXchange, marking the 11th consecutive day of a rise.
This is the first time since October 2017 that the spot price of DRAM went up for 11 consecutive days.
The latest DRAM price is also a 21.8 percent increase from last year's bottom of $2.74 on Dec. 5.
A spot price is the price quoted in the market, while contract prices are negotiated as monthly or quarterly deals. Changes in spot prices affect contract prices. Generally, 90 percent of DRAM chips are traded on contract quotes.
With the latest signs of recovery, industry insiders expected that contract prices are likely to go up in the first quarter.
The contract price of 8-gigabit DDR4 DRAM has been at $2.81 since October.
Analysts said DRAM prices are on a rebound due to new investments by data centers, the expansion of 5G communications and expectations of a global economy recovery.
DRAM spot quotes surged 24 percent in 10 days during July following Japan's export curbs on key semiconductor materials against South Korea, but this time, the hike is backed by low inventory levels and increasing demand, according to analysts.
"Following its earnings report, Taiwan Semiconductor Manufacturing Co. said that demand for 5G smartphone chips is strong," said Lee Seung-woo, an analyst at Eugene Investment & Securities Co. "It appears that the memory chip demand in the second and the third quarters is likely to remain very high."
The recovery in DRAM prices is expected to boost earnings of local chipmakers that dominate the global memory chip market. DRAM is a type of volatile memory chip.
In the DRAM market, Samsung Electronics Co. and SK hynix Inc. were the top two players, grabbing a combined 74.7 percent market share in the third quarter, DRAMeXchange data showed.
The two companies are projected to have suffered a sharp drop in their 2019 earnings after prices of DRAM and NAND flash products sank due to sluggish demand and a high level of inventory. But analysts predicted that they will see improved profits this year.
"DRAM prices will make a slight rebound in the first quarter and are expected to start expanding their upward trend in the second quarter," said Kim Dong-won, an analyst at KB Securities Co. (Yonhap)