South Korea’s SK Hynix Inc., the world’s second-largest memory chipmaker, is expected to be a key beneficiary from production disruption at NAND flash memory plants in Japan jointly owned by US Western Digital Corp. and Japanese Kioxia Holdings Corp.
Western Digital said on Wednesday that contamination of certain material used in its manufacturing processes has occurred and is affecting production operations at both its Yokkaichi and Kitakami joint venture, flash fabrication facilities.
Western Digital said the disruption was estimated to reduce its flash availability of at least 6.5 exabytes. One exabyte equals one billion gigabytes.
Analysts turned bullish on NAND flash memory prices after the interruption as Western Digital and Kioxia were major players in the market with market shares of 19.3% and 13.2% in the third quarter of 2021, respectively, according to market tracker TrendForce.
The market intelligence provider expected NAND flash prices to rise 5-10% in the second quarter of this year, revising an earlier forecast of a 5-10% decline.
SK Hynix is expected to benefit the most since
its acquisition of Intel Corp’s NAND flash memory chip business will expand its production capabilities, analysts said.
“Samsung Electronics is also expected to benefit, but its NAND flash business portion in total sales is smaller than the one of SK Hynix,” said Kim Kyung-min, an analyst at Hana Financial Investment. “So, a rise in (Samsung) stock prices is likely to be relatively slow.”
BULLISH VIEWS EMERGEThe outlook on the global semiconductor industry is turning bullish.
In August 2021, Morgan Stanley had forecast doom for the sector, issuing a report titled
“Winter is coming.”Morgan Stanley said in the report that the semiconductor industry approached its peak because supply was catching up with demand. It expected DRAM prices would see a single-digit decline in the first quarter of 2022. It also revised the target price of Samsung Electronics Co. to 89,000 won ($74.4) from 98,000 won.
But the industry
enjoyed record earnings last year on strong demand for memory chips for servers, as well as growth in the metaverse and game industries.
Morgan Stanley this week came up with a bright outlook, expecting some Asian semiconductor stocks to take the lead once the falls in internet technology shares are over.
The investment bank selected Samsung and Taiwan Semiconductor Manufacturing Co. (TSMC) as top picks, saying they are leaders in the global foundry industry that has high barriers to entry.
DRAM prices may also have hit bottom, analysts said.
The price of 64GB DDR4 was unlikely to fall further in the second quarter after dropping to $256 in the January-March period from $304 in the third quarter of 2021, market tracker Omdia forecast. The price of 8GB LP DDR5 for mobile devices was also expected to slide to $28 in the current quarter and stay around the level in the April-June period.
Write to Sin-Young Park at
nyusos@hankyung.comJongwoo Cheon edited this article.
