Korean Tech Giants in Trouble as Chip Prices Plunge

Memory chip prices are plunging, casting dark clouds over the sole mainstay propping up the growth of Korea's biggest businesses.

Chinese rivals are poised to start production of memory chips soon, potentially pushing prices down even further.

According to market researcher DRAMeXchange, the spot price of DDR4 8Gb DRAM stands at US$7.90, down 17 percent from January this year. Prices fell below $8 for the first time last week.

NAND flash (64Gb) prices fell 18 percent over the same period to $3.30. Spot prices reflect actual market prices and serve as key indices in forecasting future contract price trends.

Prices are declining because demand has slowed while supply keeps growing. Output has surged due to the big data boom, but some industry watchers fear it may be nearing an end.

One semiconductor industry insider said, "The boom over the last five years has already lasted longer than previous ones, so it's not unusual for the trend to shift now."

Samsung Electronics and SK Hynix, Korea's top two listed companies, saw their share prices plummet on Monday.

Samsung shares fell two percent compared to the previous session to W46,500 and SK Hynix's more than seven percent to W81,700.

One domestic brokerage drastically lowered its target price for SK Hynix over concerns about worsening earnings.