SEOUL, April 1 (Reuters) - Samsung Electronics Co Ltd is considering a single-digit percentage increase in prices for computer memory chips in April, in a sign that a long and brutal industry slump may be ending.
Chu Woosik, executive vice president in charge of investor relations at the world's top maker of memory chips, told Reuters by telephone that the South Korean company was considering raising contract prices for dynamic random access memory (DRAM) chips—widely used in personal computers.
"We think we have hit a bottom" in the memory market, Chu said. But he added that current market conditions did not warrant a big price increase.
Samsung's comments come a day after Japanese rival Elpida Memory Inc said it aimed to raise the price of DRAM chips by 20 percent in April.
A small rise in the price of memory chips is unlikely to have a significant impact on the retail price of electronics due to small scale of the increase and the number of other components. But analysts dismissed talk of price increases above the level mentioned by Samsung.
Chu's remarks lifted Samsung shares 2.4 percent to 638,000 won by 0404 GMT, outperforming the wider market's 0.39 percent rise. Elpida's stock rose for another session, adding a further 9.3 percent.
Memory chip makers worldwide are grappling with oversupply and collapsing prices in DRAM chips. The sector's profitability has also been hit by steep price falls in NAND flash memory chips used in portable electronics.
The average spot price of the 512 megabit double-data rate two chip which runs at 667 megahertz stood at $0.93 each as of Monday, 69 percent lower than a year earlier, according to online chip clearinghouse DRAMeXchange.
The average contract price for the same type of chips was at $0.91 per unit in the second half of March, DRAMeXchange data showed.
Elpida on Monday said it hoped to negotiate with computer makers for a 10 percent price increase in its DRAM chips in the first two weeks in April and another 10 percent in the second two weeks, saying the current prices are not sustainable.
But Hynix Semiconductor Inc, the world's No. 2 memory chip producer, remained cautious.
"We will negotiate to obtain the best results in the current market conditions," Hynix vice president James Kim, in charge of investor relations, said when asked about contract prices.
Hynix shares rose 1.44 percent to 28,250 won.
SMALL RAISE SEEN
"A 3-4 percent rise in DRAM price could be possible," said Lee Min-hee, an analyst at Dongbu Securities, referring to Samsung's plans.
"The timing of the price rise seems a little early, but there is evidence that the contract market is tighter."
Lee, however, dismissed Elpida's 20 percent target.
"That is impossible. PC makers will refuse to negotiate."
PC makers echoed Lee's prediction.
"We don't think there is room for a 20 percent price increase for DRAM since supply and demand are balanced right now," said a spokesman for Taiwan's Compal Electronics, the world's No. 2 contract laptop PC maker.
"There is no reason to see such a big price jump and it won't be accepted by PC makers. If it's just a small increase then it shouldn't affect PC vendors that much, but it will make prices tighter."
Lehman Brothers, in a note on Tuesday, agreed that a bottom had been reached in the first quarter.
"The best time to buy memory names was 1Q08," the report said. "We belive the war in the DRAM industry is already over, with Samsung being the winner." (Additional reporting by Sheena Lee in TAIPEI, editing by Keiron Henderson and Louise Heavens)
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