Hynix price hike ignites chip stocks

By staff and wire reports

SEOUL, Korea -- Chip stocks around the world are enjoying a much-needed lift on Thursday, after South Korea's Hynix Semiconductor announced its third price hike in a month.

Shares in Hynix soared 8.3 percent in early Thursday trade to reach 3,010 won.

Other chip stocks, especially U.S.-based Micron Technology, gained ground on Wednesday, the first day of 2002 trade for most.

The Hynix price hike got overnight affirmation from U.S. industry reports that hint at a worldwide turnaround.

Hynix and Micron are also set to wrap tieup talks this month. Those three factors have driven new optimism in the industry.

But it will be a long way back.

Big boost after worst year ever

In 2001, the chip sector experienced its worst slump in history. An inventory glut along with economic recession hit global demand for microprocessors and memory chips.

Hynix, the world's third largest memory chipmaker, on Wednesday announced it would raise contract prices by 30 percent on 128 megabit DRAM chips.

DRAM stands for 'dynamic random access memory.' DRAM chips are the most commonly used memory chip type, as well as the most volatile chip category.

Prices in DRAM chips, the least profitable semiconductor category, fell more than 90 percent in 2001. But they started to come back toward year end.

Hynix said it hiked prices on faith that a stronger appetite for personal computers in China and the spread of Microsoft's Windows XP operating system would increase chip demand.

Positive take on the industry

The Korean chipmaker is also expected to tie up talks with the U.S.-based Micron Technology on an alliance in both the memory and nonmemory chip businesses.

A positive forecast from the Semiconductor Industry Association also gave a big boost to the industry. The trade group announced on Wednesday that global chip sales rose in November by 1.6 percent.

Investment bank Credit Suisse First Boston also gave an uplifting estimate, telling clients that the chip sector may have bottomed out.

That pair of positive reports, along with news of the DRAM price hike, helped lift chip stocks across the globe.

Micron shares gained $1.91, or 6 percent, on Wednesday to hit $32.91, on the New York Stock Exchange.

Also on the NYSE board, Germany's Infineon Technologies enjoyed an 8 percent lift to reach $22.01.

Hynix shares finished up 15 percent, the daily limit for a one-day move in Korea, on Wednesday.

After the U.S. chip rally, Hynix Semiconductor continued to power higher on Thursday to hit a six-month intraday high in Seoul, on hopes of a further rise in chip prices.

That confident outlook is also boosting tech stocks in Taiwan, Hong Kong and Singapore.

Reuters contributed to this report.