Report chips away at SK Hynix shares

Home > Business > Industry

print dictionary print

Report chips away at SK Hynix shares

SK Hynix was another Korean tech stock that plunged yesterday after a foreign report advised investors to sell their shares in the company on the expectation that memory-chip prices will drop.

SK Hynix saw its shares plunge 8.72 percent yesterday after CLSA Asia-Pacific Markets’ report suggested the chipmaker’s earnings will spiral down after reaching a peak in the third quarter.

Demand for dynamic random access memory (Dram) chips for personal computers is weaker than what spot prices indicate, the report said. Foreign investors own 31 percent of the chipmakers’ shares.

Dram business accounted for about 70 percent of SK Hynix’s total sales in the first quarter, according to Park Seong-ae, the company’s spokeswoman.

SK Hynix’s stock prices change in sync with Dram prices that are high at the moment, but are expected to dip after summer, and this will likely affect the stock prices, Matt Evans, a CLSA analyst based in Seoul, wrote in the report. Dram prices is estimated to hit peak at $1.75 in August.

“Recent experience suggests it will be difficult for SK Hynix’s stock price to increase if the spot price is falling,” he wrote. The report projected that earnings will fall roughly 16 percent in the fourth quarter of this year and the first quarter of next year.

Evans also speculated that the Korean chipmaker’s lead in the global market will narrow once the merger between Japan’s Elpida and U.S. company Micron, which rank third and fourth in the world, is finalized. Market experts expect considerable impact once the merger, which started last year and was approved by a Japanese court earlier this year, is finalized.

It was the first drop that the Korean chipmaker has seen since five trading days.

BY LEE ho-jeong, bloomberg []

BY LEE ho-jeong, bloomberg
Log in to Twitter or Facebook account to connect
with the Korea JoongAng Daily
help-image Social comment?
lock icon

To write comments, please log in to one of the accounts.

Standards Board Policy (0/250자)

What’s Popular Now