Rising DRAM Prices May Lead to Nation’s Economic Recovery

With continuously rising semiconductor prices, there are growing expectations of a rebound in the nation’s chip-making industry as well as general economic recovery.

According to DRAM Exchange, a Taiwanese electronic chip trading broker, prices of the major product DDR 256Mb 266MHz soared 6.8% to 3.50-3.85 dollars as of 6 p.m. on June 13, compared to that of last weekend.

Current prices have surged by 24.8% from the lowest price of 2.86 dollars on February 26.

Prices of the promising product DDR 256Mb 400MHz also showed a gain of more than 32% reaching 4.60-5.20 dollars from the average 3.70 dollars a month ago.

SDRAM prices, Korea’s major product last year, inched up as 256Mb 133MHz is currently being traded at an average of 3.40 dollars.

The rise of DRAM prices is attributed to additional demand with companies changing their PCs as well as the introduction of new PCs.

In particular, the ‘865 Series,’ a new chipset introduced by Intel last month, is driving demand for high-priced PCs and DDR 400MHz. As cases of SARS have decreased, computer distributors in China are securing memory chips in preparation for the high-demand season.

Rebound in the semiconductor industry directly affects the domestic economy.

For example, rising DRAM prices can boost the stock price of Samsung Electronics, leading to active investment in the Group overall, thus leading to an increase in domestic demand, and finally to economic recovery.

The nation’s biggest electronics company plans to raise the proportion of DDR 400MHz from the current 30% to 50% by next month. The product is expected to account for more than half the sales of DRAM in the future. As such, Hynix will increase the production of DDR 400MHz to 80%.

The stumbling block is a final ruling from the U.S. Department of Commerce scheduled for June 18 over countervailing tariffs imposed on Korean memory chips. If the ruling confirms the preliminary ruling that imposes the countervailing tariffs of 57.37% on Hynix DRAM in April, the company will be hit hard by U.S. exports.

“Despite some uneasy factors, clear signs of recovery in the DRAM market have had a positive influence on the nation’s stock market and the economy overall,” said Seo Do-won, an analyst of Korea Investment Securities.

He stressed that the whole country should join together so that the semiconductor industry can rebound and lead in economic recovery for the nation.

Ho-Won Choi bestiger@donga.com