Do not feel chipper on the chips
Do not feel chipper on the chips
Do not feel chipper on the chips
Almost all gains in US technology stocks have been eliminated this year. Across the Pacific, the route has been some time ago.
Kospi reference index composed of Korea fell in a bear market Thursday, dragged by
and manufacturer of memory chips
000660 -0.15%
The two companies, which together account for about a quarter of the index, have fallen around 30% from their highs at the end of last year, although both continue to report record profits. SK Hynix said on Thursday that its operating profit in the last quarter rose 73% to $ 5.7 billion. Samsung said earlier this month that its operating income in the third quarter would be the highest in its history, 20% more than last year.
The concern of the market is that the price boom of memory chips, which is behind these record earnings, It is ending. The high demand for data centers, driven by the increasing use of cloud computing and artificial intelligence, has caused the prices of DRAM, a type of memory chip used in data processing, to more than double in the last two years. Now, the offer is catching up. DRAM capital spending worldwide has increased 40% this year to $ 22.9 billion, according to the market research company IC Insights.
SK Hynix said on Thursday that its operating profit in the last quarter rose 73% to $ 5.7 billion.
Photo:
Lee jae won / Reuters
As the market balances, DRAM prices could fall by 5% in this quarter compared to the previous one, predicts the research company DRAMeXchange, which ends with a nine-quarter growth streak. They could drop another 15% to 20% next year, esteem. Meanwhile, the prices of NAND, another type of chip used in storage that both Samsung and SK Hynix manufacture, have already been falling and could fall between 25% and 30% next year.
The good news is that the deceleration of the chips could be less severe this time than in previous cycles, largely because the market has become more consolidated. Three companies, the two Korean giants and Micron of the United States, basically control the entire DRAM market. And its stock prices now. It reflects a large part of the pessimistic outlook.. Samsung quotes with a business value just 2.3 times its expected earnings before interest, taxes, depreciation and amortization, a minimum of five years.
That does not mean that now is the time for investors to launch, especially when the massive sale of technology from the United States seems to be accelerating. The PHLX semiconductor index, an indicator of the stocks of chips that are listed on the US list. UU., Has lost 10% in the last week, but this year has still outperformed Kospi.
The chips may be down, but it's worth waiting for cheaper deals on chip stocks.
Write to Jacky Wong in JACKY.WONG@wsj.com
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ORIGINAL ARTICLE THE WALL STREET JOURNAL
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