Shares of South Korea’s two semiconductor makers Samsung Electronics and Hynix have fluctuated this week amid the plummeting flash memory price, raising concerns about the companies’ weak product portfolio.

The two firms’ stock prices rose by 2.8 percent and 7.2 percent each from Wednesday to Friday after the firms insisted that the soaring demand will negate the price downfall in the second half of the year. They have suffered sharp price drops of 5.4 percent and 17 percent over the previous four days, as the NAND flash memory price has rapidly fallen this year.

NAND flash memory chips are used to store pictures, songs and movie files in consumer electronic gadgets such as MP3 players and digital cameras. Both Samsung and Hynix have been supplying the flash chips for Apple’s iPod music players since last year.

The price of flash memory chips has fallen more than 10 percent this month, according to Taiwan-based researcher dramexchange.com. Prices of widely used 4-gigabite and 2-gigabite memory chips fell by 24.7 percent and 34.4 percent, and the 8-gigabite chip also saw a 13.8 percent decrease in its price.

Also, rumors that Samsung has been struggling to make a contract with Japanese electronics maker Sony hurt the chipmakers’ stock values. Sony reportedly decided not to purchase Samsung’s flash memory chip for their upcoming portable multimedia player, allegedly PlayStation Portable 2, as they opted for less expensive hard-disk drives instead of the flash memories.

Samsung, which has about half of the market, said late December that it could sell NAND flash memory chips to Sony and others. The company on Thursday rebuffed such claims that the talks with Sony have failed.

``What we are negotiating with Sony concerns a different product from what is currently being speculated about in the market. The rumor is not true,’’ Chu Woo-sik, vice president for investors relations at Samsung, was quoted as saying by Maeil Economic Daily.

Chu also said that rapid NAND flash price falls have been well expected.

``The seasonal decline of the NAND price in the first quarter is slightly greater than the 15 percent decline we had expected initially. But eventually, the falling price will boost the demand within a couple of months. It is expected that the demand in the market will greatly exceed the supply in the second half of the year.’’

NAND chips are increasingly replacing DRAM (dynamic random access memories) as the main profit source of the two Korean chipmakers, Samsung and Hynix. They accounted for more than 70 percent of Hynix’s operating profit in the fourth quarter of last year, according to Goldman, Sachs & Co.

Samsung was the world’s second largest memory chip maker, after Intel, last year. Hynix moved three steps up to ninth place, with its revenue increasing by 23.4 percent from a year ago.

By: DocMemory
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