Hynix gets Nomura support for 21-nm NAND

LONDON, UK: Investment broker Nomura Financial Investment (Korea) Co. Ltd. has reportedly maintained a buy recommendation on memory chip company Hynix Semiconductor Inc. despite falling DRAM prices in the medium term and NAND flash memory prices falling in the short term.

Hynix's exposure to specialty DRAM and NAND flash memory should enable it to see a soft landing in the first half of 2011, the research group said in a note to clients, said an EE Times report. At the same time Hynix is making progress at catching up with rivals Samsung and Toshiba in terms of technology including a move to 21-nm NAND flash in 2011.

Nomura sees a downward trend in Hynix's quarterly earnings. The 3Q10 revenue and operating profit forecast at 3.3 trillion won (about $2.8 billion, flat q-q) and 990 billion won (about $850 million, down 5 percent q-q), respectively. For the 2011 financial year Nomura forecasts Hynix will see revenue of 11.8 trillion won (about $10.1 billion, down 7 percent y-on-y) and 2,555 billion won (about $2.2 billion, down 31 percent y-y).

Nomura justified some of its numbers with the observation that the computer market is moving demand away from DRAM-laden notebook PCs and towards smartphones and tablet PCs, which use less DRAM and more NAND flash memory.

Blended DRAM prices are set to fall by 8 percent in 3Q10 with PC DRAM falling faster at 10 percent and specialty DRAM falling slower at between 3 and 8 percent, Nomura analysts said. In the fourth quarter blended DRAM asp is set to fall sequentially 18 percent with PC DRAM falling by 25 percent. Nomura expects Hynix to introduced 6F2 DRAM technology in 2011. 6F2 refers to the memory cell size where F is the minimum geometry. When applied to 38-nm manufacturing process it will allow Hynix to increase the number of die produced per 300-mm diameter wafer by 60 to 70 percent compared with 8F2 applied to 44-nm process technology.

Meanwhile despite the overall strength of NAND prices, the ASP during the third quarter of 2010 is likely to fall by 16% q-q. This is because of the heightened shipment proportion of 32-Gbit devices, "We reckon the yield of 32-nm line has improved while that of 26-nm is also showing better-than-expected results," said Nomura in the note.

In 4Q10, the ASP is likely to decline by 11 percent sequentially. "We understand the company is making better-than-expected yield performance and will apply to volume production in 4Q10. The 21-nm technology is expected to begin volume production in mid-FY11, bringing Hynix’ NAND technology almost at par with Samsung and Toshiba," the note said.