Outlook for Korea’s mainstay export item and the world’s largest memory chipmakers brightened amid sharp upward momentum in the selling price of dynamic random access memory (DRAM) chips. The prices of DRAM powering PC are expected to hit their highest level in two years during the October-December period, boding well for the world’s largest and second largest DRAM makers Samsung Electronics Co. and SK Hynix Inc.

According to market research firm DRAMeXchange on Tuesday, the average selling price of DRAM chips of PCs recorded $14.5, up 7.4 percent on month, in September. The price is expected to rise by about 30 percent compared to the previous quarter and head further north until the end of the year.

PC DRAM prices have bottomed out from the second quarter on both supply shortage and turnaround in PC demand. Global PC makers including Hewlett-Packard, Dell, and Lenovo have largely expanded its PC parts inventories from the third quarter in preparation for the peak season in the latter half of the year. Tech giant Intel Corp. reportedly raised its forecast for the third-quarter sales by 4.7 percent and gross profit margin by 2 percentage point based on robust demand.

Scale-down in supply also attributed to the spike in DRAM prices. Chipmakers have been upping production of DRAMs for server and mobile devices and instead of cutting back on the share for money-losing chips for PCs. The proportion of DRAM chips for mobile devices in DRAM output rose to over 40 percent while that for PCs dropped to below 20 percent. Demand accelerated amid fears of supply shortage unless the chipmakers adjust capacity or product portfolio.

The spike in PC DRAM chips has triggered rise in overall DRAM chip prices. The DDR3 4-gigabit DRAM chip price has been falling since its peak of $3.78 in December 2014, hitting as low as $1.25 in May and June this year. In September, the price averaged at $1.5, up 8.7 percent from the previous month.

The spot prices of DDR3 4-gigabit DRAM chip and DDR4 chips gained 19 percent and 15 percent, respectively, last month. The selling prices of the DRAM chips for servers also increased by more than 10 percent in the third quarter and that of non-volatile storage (NAND) flash memory chip is expected to gain between 10 percent and 15 percent in the final quarter.

The brightened market prospects would be uplifting for the two Korean chipmaking majors.

Samsung Electronics that faced a major setback with having to recall flagship Galaxy Note7 smartphones due to battery explosion problem is estimated to have reaped about 4 trillion won ($3.6 billion) in operating profit from its semiconductor and display business. Recalling the problematic smartphones would result in about 1 trillion won losses but the gains from its semiconductor business will more than make up for the losses, market observers say.

Samsung Electronics is estimated to have registered around 3.3 trillion won in operating profit from the semiconductor business alone.

The expectation for SK Hynix’s third quarter result is also high. Samsung Securities Co. on September 21 raised its third quarter operating profit outlook for SK Hynix to 702.0 billion won from 587.0 billion won, and fourth quarter forecast to 924.0 billion won from 687.0 billion won.

On Wednesday, Samsung Electronics shares closed at 1,619,000 won, up 5,000 won or 0.31 percent from the previous session and SK Hynix shares finished at 42,600 won, up 800 won or 1.91 percent from the previous day.

By Lee Seung-hoon and Yoon Jin-ho

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