Memory-chip industry on a roll as demand rises

Korea’s semiconductor industry is humming along as long-term contract prices for memory chips continue to rise. Samsung Electronics Co. and Hynix Semiconductor Inc. said fixed prices of double-data rate dynamic random access memory -- known as DDR DRAM -- chips rose 8 percent to 12 percent yesterday. DDR DRAMs account for half of Samsung’s memory chip sales, with 95 percent sold at long-term contract prices. “During negotiations early this week, large personal computer manufacturers agreed to raise fixed prices of 256-megabyte DDR DRAM modules to a price range of $46 to $47 from $42 to $43 per module,” a Samsung official said. A 256-megabyte DDR DRAM module comprises eight 256-megabit chips. The fixed price of 256-megabit DDR 266- or 333-megahertz memory chips rose to $5.40 to $5.60, whereas 256-megabit DDR 400 megahertz memory chips climbed to $6.50. Prices of memory chips for computer servers and graphics rose 12 percent; those for general use, such as DDR 266 megahertz and DDR 333 megahertz chips, increased 8 percent to 9 percent. Samsung Electronics has raised its contract prices for memory chips four times since late June. Hynix Semiconductor lifted long-term contract prices of its memory chips by 10 percent during negotiations this week. The rise in memory chip prices is attributed to rising demand for memory chips in the third quarter of the year. Demand has continued to soar U.S. as students prepare for a new school term, people replace their personal computers and use of the Springdale chip module by Intel Corp. grows. The new module requires more individual memory chips. Memory chip supply has failed to catch up with demand, as several semiconductor makers have delayed upgrading production technologies for their plants by three to six months, and large suppliers, such as Samsung Electronics and Hynix Semiconductor, raised the portion of more profitable flash memory chips in production at the expense of memory chips. Spot prices of memory chips traded in small amounts over the Internet, meanwhile, have surpassed long-term contract prices. Spot prices are usually set 5 percent to 10 percent lower than fixed prices. “When spot prices are higher than fixed prices, semiconductor firms are likely to renegotiate higher fixed prices with long-term buyers,” an industry official said. According to the DRAM Exchange, an online spot market for memory chips, 256-megabit DDR 400 megahertz DRAM chips sold for $4.90 to $5.85 on July 29, surpassing the chip’s long-term contract prices, which ranged from $4.90 to $5.40 on that day. Thursday, the maximum spot price for the chip was $5.60; its fixed price was $5.50. “Price increases will slow at the end of the third quarter as supply problems are solved,” the Samsung official said. “Demand will rise due to new school terms and the Christmas holidays,” he said. by Kim Chang-gyu