Dark Clouds Gloom over Semiconductor Business

- Fall of semiconductor stocks

The price of 128 mega SD Ram fell to the lowest price of $ 3.7 in the Asian spot market. 128 mega SD Ram is the most well traded item in the semiconductor markets.

Semiconductor stock prices have dropped since yesterday at the U.S. stock market. Philadelphia semiconductor index dropped 3.42percent and 5.18percent for Intel.

The U.S. National semiconductor cut down 1100 personnel, which was 10percent of total employee, for the expense cut back in the fourth quarter of the last year. It also announced that the net profit per quarter would mark 4percent loss per stock.

In domestic stock market, Hynix was on the rise by marking the highest as the creditors announced to support Hynix. However, Samsung Electronics was on the down side due to the stagnation of D Ram markets.

- Hynix and D Ram

The price of D Ram, which is under $ 3, is lower than the price of production cost of Samsung and Micron. If the price of production cost in Hynix is $ 0.3-0.5 higher than those of Samsung and Micron, Hynix can have a serious management pressure.

It seems that Hynix will survive only if the average unit cost of D Ram becomes $ 3.1, which will create a 2.5 trillion won cash flow. The stock market views that crisis will subside when the price of D Ram increase 50 cents more.

Jeon Byong-Suh, senior researcher of Daewoo Stock, said that ‘The price of D Ram heavily fell down due to the increase of supply since the semiconductor companies increased the investment. However, surplus of the supplies won’t decrease anytime soon. It is hard to expect the increase of the price of D Ram because the demand for PC decreases during summer’. However, he predicted that ‘When the demand for PC upgrade revives in the third quarter, it will bring 40-50percent of demand stimulation effect. From then, we can expect the increase of the D Ram price’.

Park Jeong-Hun sunshade@donga.com