South Korea’s semiconductor industry is showing signs of a rebound from the slump caused by the global economic downturn last year, driven by active production cuts and efforts to reduce inventories by major chip makers and manufacturers of smartphones and servers.

According to multiple sources from the semiconductor and securities industries on Monday, Samsung Electronics Co.’s DRAM shipment in the second quarter of this year is estimated to increase by about 15 percent to 20 percent from the previous quarter. Shipment in the first quarter fell by about 10 percent compared with the previous quarter, but is recovering in the second quarter.

SK hynix Inc., which has recorded losses of 5 trillion won ($3.80 billion) in the first quarter, is also showing signs of a recovery. The company’s DRAM shipment in the second quarter is expected to grow by 30 percent to 50 percent from the previous quarter, which is more than the market consensus of 20 percent.

Industry insiders said with caution that the market atmosphere has changed. In fact, market researcher TrendForce recently revised its forecast for this year’s DRAM oversupply rate to minus 1 percent from 0.9 percent and NAND’s rate to minus 0.5 percent from 3 percent. A positive (+) value means that supply exceeds demand, and a negative (-) value means the other way around.

Market analysts attribute this change in atmosphere to inventory reductions at set makers which have continued since last year. In fact, the number of inquiries at smartphone and server companies for supply contracts has increased in recent days. Furthermore, growing demand for high value-added DRAMs such as high-bandwidth memory (HBM) and double data rate 5 (DDR5) seems to be contributing to the recovery in the industry.

The decline in prices of high value-added products such as DDR5 also seems to be stalling. TrendForce recently raised its second-quarter average fixed transaction price forecast for 32 gigabytes (GB) DDR5 for servers to $80-90 from $75, reflecting high demand for DDR5, compared with DDR4, a general-purpose product with a lot of inventory.

“128GB of DDR5 for artificial intelligence (AI) servers is 10 times more expensive than 64GB of DDR4, but their orders are continuing. Demand for HBM is also great,” said Hwang Min-seong, an analyst at Samsung Securities Co.

Inventory levels in the chip industry are also expected to stabilize in the second half of this year. TrendForce predicts that the number of inventory days at three major memory chip makers, including Samsung Electronics, SK hynix and Micron Technology Inc., will drop to an average of 13 weeks in the fourth quarter of this year after reaching an average of 16 weeks in the first quarter.

By Lee Sae-ha and Yoon Yeon-hae

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