SEOUL (Reuters) – Shares of South Korean chip giants jumped on Thursday, after the U.S. chipmaker Micron Technology Inc forecast a recovery in the memory market saddled with oversupply as a device of the question sinks in.
FILE PHOTO: a Memory of the chip parts of the U.S. memory chip maker MicronTechnology are shown on their stand at an industrial fair in Frankfurt, Germany, July 14, 2015. REUTERS/Kai Pfaffenbach
The world’s second largest memory chip maker, SK Hynix Inc, saw its shares rise by almost 7 percent by 0330 GMT, while the technology giant Samsung Electronics Co Ltd gained 4.3 percent.
Micron said on Wednesday it saw recovery in the memory chip market, after reporting a quarterly profit that beat analyst estimates as cost control helped offset falling demand and prices.
“Micron projection on the growth of the memory chip demand from data center operators, the establishment of a positive outlook for the memory chip industry, boosting the shares of the South Korean chipmakers,” said analyst Seo Sang-young of Kiwoom Securities.
Analysts are cautious about the prospects of the memory chip market as a result of a lower demand for smartphones and falling investment from data center companies.
“With the plans of the production to decrease, it seems that the Micron is determined to have a better control of oversupply problems in the chip of the market,” said analyst Park Sung-soon at BNK Securities.
Technical research firm TrendForce, in a report Wednesday said that it is a only a slight drop in the NAND flash chip sales in the second quarter as demand recovers from smartphones, computers, and servers.
“Although it will not lead to an immediate reversal of the situation, it will have a positive effect on the market,” analyst are You at DRAMeXchange, a Trendforce division, said in the report.
Both Samsung Electronics and SK Hynix said in their earnings conference calls in January that they expected that the sales of the memory products to revive in the second half of the year.
Rising chip stocks helped lift the broader KOSPI stock price index by 0.3 percent.
Reporting by Heekyong Yang; Editing by Christopher Cushing