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The price of semiconductor memory chips, one of Korea's key export items, is showing signs of bottoming out and maybe recovering. Elpida, a Japanese semiconductor maker, on Monday said it will raise its contract price for semiconductor chips for computers by 20 percent in April.
It is unprecedented for a chipmaker like Elpida to announce a price hike. Usually the contract price of chips is determined by negotiations between chipmakers and computer makers. Price hikes are not normally announced in a formal way.
But Elpida bucked that trend and announced that it was unilaterally raising its price. This shows that chipmakers are worried about the consequences of continuing to sell their products at the current giveaway prices.
In early 2007, the contract price of DDR2 512mega DRAM memory chips was US$6, but it has since tumbled to $0.91. All chipmakers except Samsung Electronics, which has a competitive lead in the market, are suffering losses.
For most chipmakers, it seems the more they sell, the greater their loss. Hynix, for example, incurred a loss of W318 billion (US$1=W990) in the fourth quarter of 2007.
Some semiconductor makers have already thrown up their hands. ProMOS of Taiwan announced a plan to curtail its facility investment for 2008 by 67 percent. Qimonda of Germany also plans to reduce investment by 44 percent.
Despite efforts to reduce supply, prices still haven't recovered. Under these circumstances, Elpida publicly raised its price. The stock market reacted favorably with an upward "Elpida effect" on Monday. Hynix's stock price rose 5.89 percent and that of Samsung Electronics climbed 1.63 percent as investors bet that chip prices will rise further.
(englishnews@chosun.com )
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