Hynix sees strong chip market until early 2011

SEOUL, SOUTH KOREA: Hynix Semiconductor, the world's No. 2 memory chipmaker, sees the current strong market condition lasting until at least early next year and may raise investment, its chief financial officer said on Tuesday.

"Current strong market conditions will last for at least another three or four quarters...we are considering raising (capital investment for this year) by 20 to 30 percent," Kim Min-chul told the Reuters Global Technology Summit in Seoul.

As the memory chip sector recovers strongly from its worst ever downturn, global chipmakers, led by industry leader Samsung Electronics, are aggressively raising investments, turning up the heat on rivals with less cash to compete.

Shares of Hynix tumbled more than 10 percent in two days to a two-month low on Tuesday, pummelled by Samsung's record 18 trillion won ($15.6 billion) investment plan announced on Monday.

Hynix's 2.3 trillion won investment plan for this year amounts to only one fifth of Samsung's 11 trillion won budget for its semiconductor business.

"We've started bringing forward investment schedules for this year (on strong demand)...and we are still unable to meet demand for PC and server DRAM chips. The shortage will likely ease in the second half as supplies grow," Kim said.

The bullish outlook echoes comment made by its close rival Micron Technology of the United States on Monday.

The U.S. company, which is No.4 memory chipmaker, also said at the Reuters summit that strong demand for computer memory would soak up massive increases in capacity this year.

Kim, however, cautioned that upside for contract DRAM chip prices was seen limited as a robust gain in prices since late last year made memory chips now account for around 10 percent of computer costs.

"We are not seeing yet reduction in memory contents per computer due to higher chip prices, but don't think prices can go up sharply higher from here either," Kim said.