Have Chips Hit the Bottom?

With the recent strength in semiconductor stocks in the Korean stock market, there is growing expectation of yet another round of silicon rally.

Some analysts forecast, albeit carefully, that the semiconductor business will bottom out soon, while others warn that it is too early to predict long-term trends.

On Seoul's main exchange, Samsung Electronics Co. reached 200,000 won ($161) last week, and many semiconductor equipment makers listed on the Kosdaq market, including Joosung Engineering Corp. and Silicon Tech Ltd., also continued their winning streaks, gaining 15 percent to 40 percent.

Analysts say that the ascent was triggered by a jump in the share prices of their U.S. counterparts on the Nasdaq market and a growing belief that the business is near a bottom.

"Given that stock prices mirror a business cycle in advance, it seems that the days are numbered before the semiconductor business bottoms out," said Ha Jung-hun, an investment analyst at Samsung Securities Co. "After a few corrections, chip shares will likely go up."

Others are not so optimistic in view of the depressed personal computer market and a possible oversupply of memory chips next year.

by Chung Jeh-won