Chip prices rise on ‘production problems’

The production problems have occurred at some suppliers of dynamic random access memory, or DRAM, chips because of delays in upgrading the companies’ manufacturing plants, said Jocelyn Chen, a spokeswoman for Taipei-based Dramexchange.com. She declined to identify the firms beyond saying they’re Taiwanese.

Prices of the benchmark DRAM chip rose 4.1 percent to US$2.30 Thursday after jumping 17 percent Wednesday, the most according to Dramexchange data that dates back to August 2005.

Shares of Samsung Electronics Co., Elpida Memory Inc. and other makers of computer memory rose Thursday after spot prices of the chip surged on speculation that some producers are experiencing production problems.

Samsung Electronics, the world’s largest maker of computer memory, rose 2.1 percent to 589,000 won and Hynix Semiconductor Inc. jumped 7.3 percent at the close in Seoul. Elpida Memory gained 4.4 percent in Tokyo. In Taiwan, Nanya Technology Corp., Powerchip Semiconductor Corp., and Inotera Memories Inc. rose.

In Taipei, shares of Nanya Technology rose 3.5 percent to NT$29.80, Powerchip’s stock gained 2.3 percent, and Inotera added 5.5 percent.

Some manufacturers are taking as much as 90 days instead of the usual 50 days to convert their plants to so-called 70-nanometer technology from 90 nanometers, Dramexchange’s Chen said.

A nanometer is a billionth of a meter and the technology refers to the width of transistors in a semiconductor. Smaller transistors can help manufacturers make more chips out of silicon wafers and reduce costs.

Eric Tang, a spokesman at Powerchip Semiconductor Corp., Taiwan’s biggest memory chipmaker, denied the company has production problems and said it is manufacturing “thousands” of silicon wafers each month with 70-nanometer chips.

Expectations that demand will rise is also helping drive up DRAM prices, with at least one Taiwan manufacturer raising its prices by more than 20 percent this week, Dramexchange’s Chen said, declining to identify the company.

Higher chip prices will be positive for earnings at semiconductor makers, according to Jay Kim, an analyst at Hyundai Securities Co. in Seoul, who raised his recommendation on the industry to “overweight” from “neutral” Thursday.

“The market pretty much agrees on an upward trend for the second half,” said Kim Ki Bong, who oversees about US$1.6 billion at CJ Asset Management Co. in Seoul.

DRAM prices rose partly because some Taiwan manufacturers are having difficulty producing chips from so-called 70- nanometer technology, according to Lee Min Hee, an analyst at Dongbu Securities Co. in Seoul. A nanometer is one billionth of a meter and measures the width of transistors in a chip.

“Having production problems means that there will be a slowdown in supply growth,” Lee said. “The supply environment is changing to a more favorable one.”

Manufacturers scaling back production is helping chip prices to stabilize, according to James Song, an analyst at Good Morning Shinhan Securities Co. in Seoul. Chipmakers may be shifting some production capacity to a different type of chip known as flash memory, which is used to store songs and pictures in music players and cameras, Song said.

“Concern that supply may be tight in the second half seems to be pushing up demand from DRAM buyers,” Song said. “There may even be a shortage later in the second half.”

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