The falling memory chip prices have taken down the shares of SK Hynix and Samsung Electronics Co. with it. SK Hynix’s stock price has plunged by over 18% within a week.
SK Hynix closed at 105,500 won on Thursday, which is 4.74% down from Wednesday. The company was down for the sixth day straight since Aug 4 when it closed at 121,000. Samsung lost 1.9% to close at 77,000 won on the Seoul bourse. This was the lowest since December 2020.
Analysts have said that the plunge was caused as investors fear a price decline of DRAM.
An expected decline
Samsung and SK Hynix are the world’s largest DRAM makers. Market researcher TrendForce said that the combined market share of both companies was estimated at over 70% in the first quarter of the year. In a report earlier, TrendForce expected a decline by 0-5% in the fourth quarter.
“Demand for PC DRAM in the spot market began to show signs of bearish movement in early July ahead of time, as DRAM suppliers continued to lower prices in order to adjust their DRAM inventories,” Trendforce said.
Furthermore, the market researcher went on to say that the general behaviors of DRAM buyers with regards to procurement have changed dramatically in the first half of the year. The demand for servers, PCs and other applications is declining only to indicate that there will be an oversupply in the DRAM market.
Lowered target stock prices
In the negative outlooks, the analysts have lowered the target stock prices of the chipmakers. However, some others have said that the price decline and the possible down cycle in the memory market may not be long.
“Major memory producers’ inventory levels are less than a week, while production bottlenecks are deepening,” said Lee Jae-yun, an analyst at Yuanta Securities.
“It means that the market is not likely to repeat long price adjustments that we saw between the fourth quarter of 2018 and the fourth quarter of 2019. It could rebound from the third quarter of 2022 at the latest.”