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Samsung CEO says DRAM prices seen stabilizing

06/23/2005

KIHEUNG, South Korea (Reuters) - Samsung Electronics Co. Ltd., the world's top memory chip maker, expects computer memory chip prices to stabilize after falling more than 40 percent so far this year, a Samsung chief executive said on Thursday.

Global chip makers are spending heavily to boost capacity, triggering a sharp decline in prices of DRAM (dynamic random access memory) chips used mainly in computers, casting a shadow over Samsung's profits in the second quarter.

"DRAM prices fell more than 40 percent from the beginning of the year to now," Hwang Chang-gyu, president and CEO of Samsung's semiconductor operation, told reporters at a Samsung chip plant. "The price will stabilize."

Hwang said DRAM manufacturers are switching capacity from lower-end DRAM to flash memory chips used in hot-selling digital cameras, mobile phones and music players.

That, combined with the industry's slower migration to next generation technology, should tighten supplies in the second half.

"There are many factors to consider. Competitors are trying to move to 90 nano technology... and prices will depend on how successfully they move to the technology," he said.

Chip makers are trying to move to chip circuitry widths of 90 nanometers, or billionths of a meter, as the advanced design rule provides smaller-sized as well as high-density chips at lower unit costs.

The price of 256-megabit DDR (double data rate) DRAM chips, the industry standard, now stand at $2.4 per unit, according to microchip broker DRAMechange.com, against $4.10 at the start of this year.

Samsung controls 29 percent of the global DRAM market, followed by Hynix Semiconductor Inc. with 16.4 percent and Micron Technology's with 16 percent, according to research firm iSuppli.

Shares of Samsung closed up 1.01 percent at 498,000 won, versus a 0.86 percent rise in the broader market.

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