A 37 per cent reduction in manufacturing capacity by the three major Korean Dram companies caused a global 25 per cent hike in memory prices this morning, as a rush for memory took the whole world by surprise.
The developments, which will affect computer prices everywhere, resulted from a Korean government request to Hyundai, Goldstar and Samsung to reduce manufacturing capacity by 37 per cent, in an attempt to save the Korean economy from financial disaster. In the past year, memory prices have slumped by 80 per cent.
Factories in Korea have already been closed down, claimed several sources acting as agents for the companies.
A source at Samsung Electronics said: ?The Korean government has taken the step to reduce the export licences on memory. Samsung will move to other production lines if the action has a serious effect on memory.? However, he claimed no factories in South Korea have closed down and added: ?I?d be very surprised if that happened.? Prices of memory were too low, he said. Although Korean companies do have fabrication plants outside Korea, the bulk of memory comes from the peninsula.
Ian Mackenzie, a director at memory distributor Datrontech, said: ?Prices have gone up by 25 per cent this morning. We all stayed up last night to watch the trends. Prices will continue going up for the foreseeable future and there is already allocation on some parts.?
That was confirmed by Roy Taylor, managing director at Vanguard, which distributes Taiwanese-made Simm memory modules. He said: ?It will mean everyone will stop selling and prices will definitely go up. We?ve already sold our allocation for the rest of this month.? Alan Stanley, managing director at French memory company Dane-Elec, said his company had also seen prices rise today.
The news is likely to affect jobs at Korean major Samsung, which relies on the continuing sales of memory as the bread and butter to launch its other products across the range.
Joe D?Elia, a senior semiconductor analyst at Dataquest, said the news did not surprise him. ?They?re all still overproducing like crazy,? he said. ?It means the supply-demand imbalance will come into balance quicker. If it?s only the Koreans who cut production it may not just help them. There's still lots of overproduction from other Far East manufacturers.?
But Datrontech?s Mackenzie thought that Japanese and Taiwanese companies will be forced to follow suit. "There is broad agreement between countries on memory pricing but the joint agreement comes up for renewal this March,? he commented.
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