Hynix shares drop on chip glut concerns, outlook

SEOUL (Reuters) - Shares in South Korea's Hynix Semiconductor Inc (000660.KS: Quote, Profile, Research, Stock Buzz) fell as much as 5.7 percent early on Monday on concerns that its earnings would remain weak in the coming quarters on a continuing computer memory chip glut.

Hynix, the world's No. 2 maker of memory chips, reported on Friday a larger-than-expected quarterly net loss of 675 billion won ($678 million) hit by overproduction and falling prices of dynamic random access memory (DRAM) chips, used in computers.

Its shares were down 5 percent to 26,700 won by 0037 GMT, lagging the wider market's 0.2 percent gain.

"Hynix's poor performance will likely continue for the long term as the expected memory market's recovery in the second half would be limited to a mere seasonal gain," said Park Hyun, an analyst at Prudential Investment & Securities.

Bigger rival Samsung Electronics Co Ltd's (005930.KS: Quote, Profile, Research, Stock Buzz) drive in DRAM adds to pressure on Hynix, analysts say. Samsung said on Friday it aimed at more than 100 percent shipment growth in DRAM this year, higher than previous market expectations.

Hynix said on Friday it was targeting up to 60 percent DRAM shipment growth this year.

"A new issue here is Samsung's aggressive production plans. This is bad news for those who expected the global oversupply to ease," said Jay Kim, an analyst at Hyundai Securities.

Samsung also saw losses from its DRAM business but posted a forecast-beating 37 percent rise in first-quarter net profit on Friday thanks to stellar performance in flat screens and mobile phones. Its shares were up 0.72 percent to 695,000 won.

($1=995.6 Won)

(Reporting by Rhee So-eui; Editing by Keiron Henderson)