By Jun Ji-hye
Securities analysts are painting a rosy outlook for the memory chip businesses of Samsung Electronics and SK hynix, saying the fall in memory prices is expected to slow, with supply and demand showing signs of improvement.
KB Securities analyst Kim Dong-won said a decline in DRAM prices will be limited in the third quarter as uncertainty in the market is expected to be mitigated, while NAND flash prices are showing signs of a turnaround in the fourth quarter.
"Demand for 32-gigabyte server DRAMs is expected to increase after the third quarter from Amazon and other cloud computing service providers in North America," he said. "DRAM prices are expected to begin to rise in the second quarter of next year."
According to data compiled by market researcher DRAMeXchange, prices of major DRAM products remained unchanged in August for the first time this year.
The average price of 8-gigabit DDR4 DRAM, a benchmark price for the category, was tallied at $2.94, which was the same as a month earlier. This marked a pause in the downward spiral of the price that had taken a nosedive by 59.5 percent in the first seven months of the year.
The average price of 128-gigabit multi-level-cell (MLC) NAND memory chip stood at $4.11 in August, up 2.5 percent from the previous month.
Samsung Electronics suffered a 55.6 percent decline in operating profit in the second quarter from a year earlier due mainly to the sluggish performance of its semiconductor unit.
SK hynix also suffered an 89 percent fall in its operating profit during the second quarter from a year ago.
Samsung Securities analyst Hwang Min-seong said, however, that the two companies are expected to see an increase in shipments in the latter half of the year, citing improvement in their memory chip sales in July and August.
"The semiconductor market will make a rebound in earnest from next year," he said.
Amid the positive business outlook, the share price of Samsung Electronics has increased for five successive days from Sept. 4 when it rose 1.97 percent to 44,100 won ($37).
The rise continued at 3.63 percent to 45,700 won, Thursday, 1.31 percent to 46,300 won, Friday, 1.3 percent at 46,900 won, Monday, and 0.21 percent at 47,000 won, Tuesday.
This was the first time the company's share price has increased by more than 3 percent since June 3.
Samsung's shares closed 0.32 percent up at 47,150 won Wednesday, while SK hynix' shares closed 0.6 percent down at 82,600 won.