"Average Server DRAM Prices Expected to Bottom Out in Q4"
[Asia Economy Reporter Geum Bo-ryeong] As signals of recovery in the semiconductor industry gradually emerge, investor sentiment toward SK Hynix is reviving.
According to the Korea Exchange on the 25th, foreign investors have net purchased SK Hynix shares worth 857.3 billion KRW over the past 10 trading days from the 11th to the previous day. Across both the KOSPI and KOSDAQ markets, SK Hynix ranked first among stocks with the highest net foreign investor purchases. During the same period, institutional investors also bought shares worth 40.7 billion KRW.
SK Hynix's performance is expected to be weak in the second half of this year. Shinhan Financial Investment estimates SK Hynix's operating profit for the third and fourth quarters at 1.22 trillion KRW and 850 billion KRW, respectively. Compared to the previous quarter, this represents a decrease of 37.3% in Q3 and 30.7% in Q4.
One positive change is that due to increased orders for server DRAM (RAM), prices are expected to rise starting from the fourth quarter, which is anticipated to be the bottom. In Q4, North American data center companies are expected to resume DRAM orders after a six-month hiatus. This is because traffic has increased amid the expansion of untact demand such as remote work and online education due to the COVID-19 pandemic, and server expansion is necessary ahead of the year-end shopping season.
Dongwon Kim, a researcher at KB Securities, analyzed, "Inventory levels of server DRAM customers are estimated to decrease by 60% compared to Q2, indicating a return to normal levels. The average price of server DRAM is expected to fall by 14% in Q4 but rebound from Q1 next year, confirming the bottom in Q4."
Mobile DRAM is also likely to turn upward from the end of Q1 next year. Due to additional U.S. sanctions on Huawei, Huawei faces the risk of being excluded from the smartphone market next year, leading to anticipated competition among global companies to expand their market shares.
As investor sentiment begins to return, SK Hynix's stock price continues its upward trend. The closing price, which was 76,600 KRW on the 10th, rose to 84,300 KRW the previous day, marking a 10.05% increase over two weeks. This contrasts with the KOSPI index, which fell 5.17% from 2,396.48 to 2,272.70 during the same period.
Choi Do-yeon, a researcher at Shinhan Financial Investment, explained, "The stock price rally is expected to proceed in the order of Q3 valuation attractiveness, Q4 shipment increase, Q4 spot price rise, and fixed price increase in Q1 next year. Since SK Hynix leads earnings by two quarters, the weak performance in Q3 and Q4 is no longer a factor affecting stock price fluctuations."
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