UPDATE : 2019.12.12 THU 16:30
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Semiconductor industry watching overseas rival to gauge its future

The local semiconductor industry is waiting for the latest corporate performance results of U.S. rival firm Micron Technology, Inc to get a better idea of where it is headed, officials said Tuesday.

Micron is due to announce its profits for the September-November period Wednesday.

"The market's concern grew when (Micron's) guidance for the fourth quarter was lower than expected during a conference call on the third quarter results," Seo Sang-young at Kiwoom Securities said in his report. "It is a concern that the risk factors still remain."

Industry officials worry that Micron's increased output of DRAM in November ahead of its quarterly and yearly book closure has led to a supply glut, darkening the prospects for local chip companies.

"There will be a time gap until the market conditions that affected Micron's performance influence the performances of domestic firms, but nonetheless, Micron's results are important because they are indicators of the demand and pricing of DRAM," an official said.

Securities companies have been ringing alarm bells for the country's chip industry for some time. Their operating income estimates for Samsung Electronics in the fourth quarter are down from the initial 15 trillion won (US$13.25 billion) to 16 trillion won to about 13.4 trillion won.

Pessimism about the final quarter grew after Samsung registered its highest-ever operating income of 17.57 trillion won in the third quarter, but the estimates were scaled down more than expected, according to officials.

"The demand vacuum for memory chips was bigger than estimated," Lee Soon-hak from Hanwha Investment and Securities said in a report. "The average prices of DRAM and NAND will likely fall 10 percent and 23 percent, respectively."

The dampened prospects are also affecting prospects for next year's performance. This year's operating income is estimated at 62 trillion won, but is down to 46 trillion won next year.

Analysts put SK hynix on a similar track for the fourth quarter. The average outlook for the quarter's operating income was reduced to 5.3 trillion won from nearly 6 trillion won earlier.

"The downturn path for memory chips is quickly changing to a pattern that is worse than previously thought," Lee Seung-woo of Eugene Investment said. "Considering the excessively increased price margin for DRAM over the past two years and a number of uncertainties, the outlook needs to be conservative from the fourth quarter to the first half of next year." (yonhap)

Park Ye-seon  edt@koreapost.com

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