(Adds DRAM price increase, updates shares to close)
By Marie-France Han
SEOUL May 20 South Korea's Hynix Semiconductor
(000660.KS), the world's second-biggest maker of memory chips,
said a power outage disrupted production at a plant in China,
hitting its shares and boosting those of rival manufacturers.
The plant at Wuxi, near Shanghai, represents about half of
Hynix's total output of dynamic random access memory (DRAM)
chips, widely used in personal computers.
Hynix said the outage on Monday was likely to result in
$16-$18 million in lost sales.
"The figure includes chips lost during the outage and lost
production while the plant goes back into full operation," said
James Kim, vice president in charge of investor relations.
He said it would take about two days for the plant to fully
ramp up. The outage was not thought to be related to last
week's earthquake in Sichuan.
Separately, a chip industry source said South Korean
computer memory chip makers, including Hynix and Samsung
Electronics Co Ltd (005930.KS), had raised their contract
prices for the first half of May by around 5 percent.
"The market is on an upward trend," said the source, who is
familiar with chip makers' price negotiations and declined to
Shares in Hynix fell more than 4 percent in early trade and
closed down 2.45 percent, underperforming the wider market's
.KS11 0.65 percent dip.
Shares in rival chip makers in Japan and Taiwan gained on
hopes the disruption would reduce worldwide DRAM supply and
boost prices in a depressed market.
Makers of DRAM chips worldwide have been mired in a steep
market downturn for more than a year, with prices of some key
chips falling more than 90 percent since early 2007.
"If we assume that around 30 percent of monthly capacity
was affected by the outage, this may affect around 3-4 percent
of monthly global DRAM supply for the coming one or two
months," said CW Chung, analyst at Lehman Brothers in a note.
In Japan, shares in Elpida Memory 6665.T rose 3 percent
against the wider market's .N225 0.8 percent drop.
In Taiwan, Powerchip Semiconductor 5346.TWO and Promos
Technology 5387.TWO also rose, outperforming the TAIEX
.TWII which dropped 2.4 percent.
Shares in Samsung fell 2.1 percent.
POSITIVE FOR MARKET
Lehman's Chung drew comparisons with an outage at Samsung
last August that disrupted output of NAND memory chips, but
which eventually had little impact on prices. Chung noted the
Hynix case was different as the outage occurred against a
backdrop of industry capex cuts.
"This should help supply-demand dynamics more positively
than last year's case," Chung said.
An analyst at NH Investment & Securities estimated the
outage could reduce worldwide DRAM output for May by about 5.6
Other analysts downplayed the likely impact of the outage.
"About three days' worth of DRAM production is likely to be
affected, which could provide a temporary boost on the spot
market," said Lee Min-hee, an analyst at Dongbu Securities.
Peter Yoo, analyst at BNP Paribas, said Hynix could even
benefit from the outage if DRAM prices rise. "In the case of
last year's Samsung outage, prices jumped 14 percent."
Hynix operates the China DRAM plant jointly with Numonyx,
which is a joint venture owned by STMicroelectronics (STM.PA)
(STM.N), Intel (INTC.O) and Francisco Partners.
(Additional reporting by So-eui Rhee in TOKYO, Kim Yeon-hee
and Park Ju-min in SEOUL and Faith Hung in TAIPEI; Editing by
Keiron Henderson & Ian Geoghegan)