According to DRAMeXchange, a leading e-marketplace for semiconductor products, the price of 1-Gb DDR DRAM has increased 14 percent since the beginning of the year.

Demand is also increasing as shoppers in Korea and China buy computers for Lunar New Year gifts, and big PC makers like Hewlett Packard and Dell boost their memory chip orders in the belief that prices have hit bottom.

This may be the reason that chipmakers like Samsung Electronics and Hynix have been doing quite well on the stock market, even as markets have been plummeting worldwide.

The fact that most global DRAM makers performed so miserably last year is another reason there are brighter prospects this year. In the fourth quarter of last year, Samsung Electronics was the only global semiconductor company to post profits (W430 billion in operating income, US$1=W945) with all other major companies including Hynix, Micron of the U.S., Qimonda of Europe and Taiwan's ProMos recoding losses.

As a result, these companies have cut their investments sharply. Qimonda has decided to invest 35 percent less than initially planned, and ProMos and another Taiwanese chip maker, Powerchip, are delaying investments.

There is also speculation that companies will trim their production. Insiders believe that U.S., European and Taiwanese chip makers, which are losing competitiveness, will probably scrap old production lines earlier than planned to reduce their output.

Song Myung-sup, an analyst at CJ Investment and Securities, predicted that semiconductor prices will fluctuate once or twice in the first quarter of the year, but they will stabilize from the second quarter as investments are reduced and old production lines are removed.

(englishnews@chosun.com )