RPT-Hynix stops supplying DRAM chips to spot market

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SEOUL, Sept 27 (Reuters) - South Korea's Hynix Semiconductor Inc. (000660.KS), the world's second-biggest maker of memory chips, said it stopped supplying computer memory chips through the spot market to defend against plummeting prices.

"We have stopped selling DRAM chips through the spot market in order to enhance our flexibility and strengthen our position in the contract market," a Hynix spokesman told Reuters. He said the decision to stop selling on the spot market was effective "from September," without providing a date.

The spokesman also declined to say when selling on the spot market might resume. Hynix said it customarily sold about 15 percent of its total DRAM (dynamic random access memory) production on the spot market, with the remainder sold on the contract market.

Analysts remained cautious about the consequence of Hynix's move.

"The decision to stop selling on the spot market is aimed at protecting Hynix's prices on the contract market," said Lee Min-hee, an analyst at Dongbu Securities.

Lee estimates that the spot market represents about 20 percent of the total DRAM market.

According to research firm Dramexchange, spot prices of some key DRAM chips have declined more than 10 percent over the last 10 days alone. Dramexchange forecast DRAM contract prices to drop by 10 percent in the second half of September.

Makers of DRAM chips, mostly used in personal computers, have struggled with oversupply and steep price falls throughout the year. A brief period of rising prices in early summer was followed by more price weakness, prompting expectations earnings will peak in the current quarter, and then worsen and remain weak through the first half of next year.

On Sept. 13, Goldman Sachs and UBS cut their earnings forecasts and share target prices on Hynix and bigger rival Samsung Electronics Co Ltd (005930.KS), underscoring a weakening outlook for the chip maker sector.