Elpida Leads Chipmakers Higher on Speculation Industry Headed for Recovery

Elpida Memory Inc. led shares of computer-memory chipmakers higher after the Nikkei newspaper reported the Japanese company plans to raise prices, fueling speculation the industry is headed for a recovery.

Elpida, the world’s third-largest maker of the chips, rose 1.1 percent to 1,099 yen at the 3 p.m. close of trading in Tokyo after climbing as much as 4.5 percent. Samsung Electronics Co. and Hynix Semiconductor Inc., the industry’s two biggest producers, gained in Seoul trading, while Nanya Technology Corp. and Powerchip Technology Corp. advanced in Taipei.

An increase would end an eight-month slide that forced Elpida to cut production and led analysts to project losses at smaller Taiwanese manufacturers. Prices of the benchmark DRAM chip tumbled 63 percent since May through yesterday amid a glut, according to data compiled by TrendForce Corp.’s Dramexchange.

“Prices of DRAM chips appear to have reached a bottom,” said Sam Hsieh, a Taipei-based fund manager at Fuh Hwa Investment Trust Co., who helps oversee the equivalent of $7.8 billion. “Investors are more optimistic about the companies.”

Tokyo-based Elpida plans to raise prices of dynamic random access memory 10 percent as early as this month, the Nikkei reported today, without citing anyone. Elpida spokesman Hiroshi Tsuboi declined to comment on the report.

Park Hyun, a spokesman for Hynix, the second-largest DRAM maker after Samsung, declined to comment on whether the South Korean company has plans to raise prices. Samsung probably won’t be affected by short-term fluctuations in prices because the company negotiates long-term contracts with customers, said Chenny Kim, a spokeswoman.

Rising Trend

Suwon-based Samsung rose 2.1 percent to 969,000 won, while Hynix climbed 2.8 percent. Nanya, Taiwan’s second-biggest DRAM maker, rose 1.5 percent and Powerchip advanced 3.5 percent.

The last rally in the market for DRAM, the chips that allow personal computers to run multiple programs at the same time, started in April 2009 after Elpida president Yukio Sakamoto said he planned to raise prices in the next month by as much as 50 percent. In the following 12 months, the contract price of 1 gigabit DDR2 chips, the benchmark at the time, rose 166 percent to $2.50 last April, according to Dramexchange. The chips are currently selling for $1.53.

Not all analysts see chip prices bottoming. Prices will probably tumble 45 percent this year because of oversupply, according to a Jan. 12 report by researcher ISuppli Corp.

“Whether or not one price hike signals a trend is open to question, but once prices start to rebound they tend to keep going up for an extended period,” said Keita Wakabayashi, a technology analyst at Mito Securities Co. “The consensus has been that chip prices would bottom out this quarter.”

To contact the reporters on this story: Jason Clenfield in Tokyo at jclenfield@bloomberg.net

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net

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