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Technology Stocks : Semi Equipment Analysis
SOXX 292.04+2.4%Dec 18 4:00 PM EST
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To: Donald Wennerstrom who wrote (78571)1/15/2018 6:19:35 PM
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End of a chip boom? Memory chip price drop spooks investors
Joyce Lee
5 Min Read

SEOUL (Reuters) - After a blistering year-and-a-half long surge, a sudden drop in some memory prices, followed by Samsung Electronics Co’s disappointing profit estimate, is causing jitters among investors who had bet the chip boom would last at least another year.

Amid news that the market has started losing some steam - prices of high-end flash memory chips, which are widely used in smartphones, dropped nearly 5 percent in the fourth quarter - some analysts now expect the industry’s growth rate will fall by more than half this year to 30 percent. That led shares in Samsung to dip 7.5 percent last week, while its home rival SK Hynix fell 6.2 percent. But analysts say that there is unlikely to be a sudden crash, and that 2018 should be a relatively stable year for chipmakers.

The $122 billion memory chip industry has enjoyed an unprecedented boom since mid-2016, expanding nearly 70 percent in 2017 alone thanks to robust growth of smartphones and cloud services that require more powerful chips that can store more data.

Supply also has become more disciplined following years of consolidation that reduced the number of manufacturers to a handful from around 20 in mid-1990s.

“Memory chips will likely see a gradual price decline in 2018 if demand remains strong and appetite from servers holds,” said Lee Jae-yun, analyst at Yuanta Securities Korea.

But growth of 30 percent is a strong gain in an industry known for volatility, and the market is still on course for its longest ever boom after shrinking 6 percent in 2016.

continues at reuters.com
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