Chip Shares Showing Life, But Industry Is Still Wobbly

Semiconductor shares in Korea and Japan rallied Friday after their counterparts in the United States rose sharply overnight. But analysts said the rally is not likely to continue.

Investors snapped up U.S. semiconductor stocks Thursday on expectation of positive revenue news from Intel Corp., the world's biggest chipmaker.

Shares were also buoyed by an optimistic outlook from the U.S. Semiconductor Industry Association. The association raised its 2002 sales growth projection to 20.5 percent from 10 percent, forecasting that the semiconductor industry would bounce back in the second half of this year.

The Philadelphia Stock Exchange's semiconductor index jumped 7.7 percent.

After Thursday's markets closed, Intel confirmed investors' expectations, saying its sales for the second quarter would not be lower than its previous forecast.

Reacting to the positive news, Seoul's semiconductor shares rallied Friday. The two big chipmakers soared, with Samsung Electronics adding 4.4 percent, and Hynix Semiconductor rising 6.8 percent.

Manufacturers of chipmaking equipment listed on the Kosdaq market also surged. Jusung Engineering Co. climbed 12 percent, the daily limit. Atto Co. surged 9.3 percent. Won Ik Co., a semiconductor part supplier, jumped 7.9 percent.

"The semiconductor industry has reached bottom," said Shin Yong-jae, an analyst at Good Morning Securities. "But it will be difficult for semiconductor stocks to make big gains at once."

In the face of the semiconductor rally, dynamic random access memory prices declined Thursday. In the North American spot market, 128-megabit and 64-megabit chip prices shed 1 to 2 percent.

"Currently, there is no reason for consumers to replace their personal computers," said Jeon Woo-jong, an analyst at SK Securities. He warned that semiconductor share prices will drop if chips in inventory are released on the market before semiannual settlements.

by Chung Jeh-won