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Hynix's 3rd Price Boost Helps Lift Chip Sector

January 03, 2002|From Bloomberg News

Hynix Semiconductor Inc., the third-largest maker of computer memory chips, said Wednesday that it raised prices for the third time in less than a month as demand improved, providing hope that a steep industry sales downturn may have finally bottomed out.

The news had an immediate effect on the shares of Hynix competitors, all of which posted strong gains Wednesday.

Hynix raised long-term contract prices for memory chips by 30%, spokeswoman Kang In Young said. She didn't provide more details. The South Korean company raised prices twice in December, by 20% each time.

Sales of computer memory chips, which analysts say fell by 60% in 2001 to about $12 billion, may finally have hit bottom. The cash price of a 128-megabit dynamic random-access memory chip, an industry benchmark, rose 61% since Dec. 1 as personal- computer makers used inventory and placed orders.

Hynix's price increase "hints the industry isn't worsening further," said analyst Eric de Graaf at ING Barings, who rates Infineon shares "hold." "The question is, will prices fall again?"

Chip shares advanced. Infineon's American depositary receipts gained $2 to close at $22.30 on the New York Stock Exchange. Micron Technology Inc., the second-largest DRAM maker, rose $2.24 to $33.24 on the NYSE.

"The DRAM industry is currently experiencing healthy demand leading to a better pricing environment," said Katja Schlendorf, a spokeswoman at Infineon, the fourth-largest memory-chip maker. "It's too early to assess if it's sustainable." Prices for cash sales of memory chips rose 8% on Monday to $2.36.

Meanwhile, Hynix shares rose to a six-month high in South Korea on expectations Micron will submit an offer for some of its assets next week.

Hynix rose as much as 10.4% to 3,070 won. The stock surged for a second day on reports citing Hynix creditors as saying Micron would propose buying some of Hynix's facilities next week. Micron spokesman Sean Mahoney declined to comment, except to say talks were progressing.

"The rise is based mostly on individual investors' hopes that some sort of deal between Micron and Hynix may emerge next week," said Chang Deuk Soo, head of research at Shin Young Securities Co. in Seoul. "We'll just have to wait and see whether those hopes are justified."

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