South Korean makers of Dynamic Random Access Memory [DRAM] chips jumped in trading in Seoul Friday, on indications DRAM prices are finally starting to recover. The world's number one DRAM maker, Samsung, led the pack, gaining 6.1%, while world number two, Hynix Semi, jumped 4.7%. Also lifting the shares were two research reports from Morgan Stanley and UBS, upgrading Samsung and Hynix to 'overweight' and 'buy' respectively. Citigroup Investment Research analyst Jay Choil quotes DRAMeXchange research that shows DRAM contract prices rose 15% for July, as opposed to the just 10% rise he was predicting. This was largely as the DRAM Supply/Demand ratio fell from 115% in 1H07 to 103% in 2H07. Choil writes: "Our positive view on Samsung's 2H07 is intact with a forecast of as high as 40% QoQ OP rise in 3Q07 given tighter LCD supply, YoY handset momentum and DRAM's recovery from late June."
Sources: Citi Analyst Note, Reuters
Commentary: BOA On Semi Equipment Stocks: DRAM Price Pop Mere Inventory Build • DRAM Prices Keep Falling • DRAM and NAND Flash Spot Prices Continue To Face Downward Pressure
Stocks/ETFs to watch: iShares MSCI South Korea Index Fund (EWY) [Samsung comprises roughly 15% of EWY's holdings], Korea Fund (KF) [Samsung comprises roughly 12% of KF]. Competitors: Micron Technology (MU), Qimonda (QI), Applied Materials (AMAT), Lam Research LRCX)
Related: Wikipedia: DRAM
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