REFILE-Researcher iSuppli downgrades memory chip makers

(Refiles to fix spelling of iSuppli in headline)

TAIPEI, Nov 14 (Reuters) - Market research firm iSuppli has
cut its rating on suppliers of memory chips used in personal
computers and portable gadgets to "negative" from "neutral",
citing a supply glut and a fall in prices.

The global average selling price (ASP) for a 512Mbit-
equivalent NAND flash chip is seen falling to $0.46 in the
fourth quarter from $0.60 in the third quarter, iSuppli said in
a note late on Tuesday.

The fall is partly due to South Korean memory chip makers,
like Samsung Electronics 005930.KS, shifting production
capacity to NAND, used in digital cameras and portable music
players such as Apple's <AAPL.O iPod, from dynamic random
access memory (DRAM) chips, which are mostly used in PCs.

Pricing for 512Mbit density Double Data Rate 2 (DDR2) DRAM
has collapsed, sending Asia spot prices to less than $1 -- the
cash cost -- this week, iSuppli said.

"The DRAM industry's average operating profitability is
expected to continue to be negative in the first quarter of
2008. This means the market will record four consecutive
negative quarters on an average basis," the research firm said.

"iSuppli foresees no near-term recovery in NAND conditions,
as the holiday build season draws to a close and sales
stimulated by Christmas demand wane."

Still, market conditions should slowly improve during the
next few quarters, with DRAM picking up more quickly than NAND,
it said.

In midday trading, two of Taiwan's major DRAM makers
underperformed the broader market . Powerchip (5346.TWO: Quote, Profile, Research, Stock Buzz)
rose 1.2 percent while ProMOS (5387.TWO: Quote, Profile, Research, Stock Buzz) edged 0.2 percent
higher. The main index was up 2.9 percent.
(Reporting by Faith Hung; Editing by Louise Heavens)