With personal computer manufacturers' high season arriving in the third quarter, shortages in DRAM chips are expected to get worse, to push 64 megabyte DRAM chip prices above US$8.

Daewoo Securities (KSE: 06800) said the recent price hike is a clear indication of undersupply.

Daewoo said Intel's CPU supply is back to normal after an accident in a Mexico plant, and the high season is on its way.

Intel's decision to lower CPU prices spurred sales of high performance computers and raised demand for DRAM chips.

"Samsung Electronics has only 1-2 weeks of supply, far below the appropriate inventory level of 4-5 weeks, and the shortage will get worse as manufacturers prepare for the Christmas season in the third quarter," said Chon Byung-seo, analyst at Daewoo securities.

He forecast a 30 percent increase in DRAM chip prices will bring Samsung Electronics (KSE:05930) and Hyundai Electronics (KSE:00660) 1 billion dollars more in profits over the first half of this year and recommends both semiconductor manufacturers a strong buy.

(Yonhap)

INDUSTRY KEYWORD: Semiconductors

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