Falling chip prices are worrying the world's top two memory chipmakers ¯ Samsung Electronics and SK hynix, research firms said Monday.

"We understand that PC DRAM prices will be down 15 percent in July, far worse than expected," Bernstein Research said in a short note to clients, adding that the contract DRAM price, which chipmakers charge to set-makers, came down more than expected in July

The impact of the new Microsoft Windows operating system ¯ Windows 10 ¯ is also likely to limit the profits of the Korean chip duo.

In a conference call on second quarter earnings, SK hynix said the world's No. 2 memory chipmaker sees "limited impact" concerning the release of Windows 10 on the global semiconductor industry, although the software may awaken idling demand for corporate servers and other big data solutions by major technology companies.

But SK Group's semiconductor affiliate will be hit more than its chief rival Samsung Electronics by a fall in chip prices given SK hynix's reliance on conventional DRAM memory chips rather than NAND flash memories.

"NAND prices continue to perform much better. The NAND contract price is much more stable, continuing the recent trend of stabilization we have seen since early this year," Bernstein said.

In line with such moves, market analysts say Samsung is expected to report increased profits at its chip division in the third quarter of this year as Samsung is diversified in its chip portfolios ¯ from DRAM, logic chips to NAND flash memory chips.

"Samsung is expected to generate 3.9 trillion won operating profit at its chip division in the third quarter of this year from 3.4 trillion won a previous quarter," IBK Securities analyst Lee Seung-woo said.

SK hynix plans to cut its portion of legacy and low-end PC memory chips as the company shifts its focus toward profitable mobile DRAMs; however, analysts say the company predicts a tough third quarter.

"Due to weak demand, SK hynix is expected to report less-than-expected profits during the third quarter. Our target on SK hynix was lowered to 54,000 won from 62,000 won," said KTB Investment analyst Jin Seong-hye, expecting the company to generate 1.39 trillion won as operating profit in the current quarter.

"Apple's new iPhones will encourage SK hynix's NAND business in the latter half; however, concerns remain over the weak PC DRAM chip price in the third quarter, a negative signal for SK hynix," NH Investment Securities analyst Lee Se-chul said, adding such worries delay a rise in its stock price.

By: DocMemory
Copyright © 2023 CST, Inc. All Rights Reserved