Korean chipmakers reach new highs in stock value

SEOUL (The Korea Herald/ANN) - South Korean memory chipmakers reached a new record high in stock value Wednesday amid expectations of companies' largest profits coming from the continuing memory chip boom.

Ahead of third-quarter earnings announcements later this month, South Korean memory chipmakers reached new highs in their stock value Wednesday on expectations of the companies’ largest profits due to the continuing memory chip boom.

Samsung Electronics, the world’s biggest memory chip provider, surpassed 2.7 million won ($2,377.6) per share around noon, due to a strong buying spree by foreign investors, two days before the company was set to release preliminary earnings.

It was the first time for the bellwether with a market capitalisation of 353.2 trillion won to break the mark since going public, according to market data.

Local stock brokerage firms released a market consensus that Samsung’s operating profit in the third quarter would come to 14.3 trillion won, a 175.7 per cent jump year-on-year.

The third-quarter operating profit from the semiconductor division of Samsung is forecast to be 10.5 trillion won, accounting for 73 per cent of Samsung’s total operating income.

“Although Samsung’s new NAND flash memory fabrication in Pyeongtaek showed a lower-than-expected operating rate in the third quarter, rising prices of memory products are likely to propel the company’s profit to the largest this year,” said Kim Yang-jae, an analyst at KTB Investment & Securities.

Recent surges in DRAM prices are also likely to contribute to Samsung’s upcoming profits, market observers said.

According to global semiconductor industry tracker DRAMeXchange, the fixed price of DDR4 4Gb 512Mx8 2133MHz for PCs soared nearly 70 per cent as of end-September compared to end-December 2016.

“The price growth is expanding this month, raising expectations for Samsung’s fourth-quarter earnings even more,” Kim said. “Samsung’s record-breaking performances are expected to continue through 2018, considering current market conditions.”

Due to the severe shortage of DRAM products amid high demand from the mobile, PC and server industries, Samsung is said to have clinched supply contracts at about 15 per cent higher prices for the fourth quarter, according to the industry.

Owing to its chip unit, Samsung is projected to obtain over 50 trillion won in annual operating profit this year for the first time. Some in the financial industry bet on over 60 trillion won.

SK hynix also hit a new high of 90,300 won during the day’s trading due to favorable market conditions.

The semiconductor business of another Korean conglomerate SK Group is anticipated to obtain 3.8 trillion won in operating profit in the third quarter, seeing a 427 per cent surge from a year earlier.

The company’s annual operating profit is projected to surpass 10 trillion won.

SK hynix, the world’s second-largest DRAM provider, will announce finalised third-quarter earnings on Oct. 26.

Samsung’s share price closed at US$ 2,407 Wednesday, up 3.48 per cent from the previous day, while SK hynix edged up 0.45 per cent to US$ 78.51

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