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Stockpile fears as SK cranks up DRAM output

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South Korean DRAM makers are threatening price stability by suddenly ramping up memory output to record levels. Memory vendors are hiking 64-megabit production by up to 40 per cent, after months of cutting back due to oversupply and rock bottom prices. Leading DRAM maker Samsung last week confirmed a 40 per cent jump in 64-megabit output, to 17 units monthly by the end of the year. LG Semicon will increase 36 per cent and Hyundai 25 per cent, both to 15 million per month. But distributors in the UK fear the surge will disrupt current price stability, causing an adverse impact on the market and reversing higher DRAM price predictions. Distributor GSI said the last ten weeks had seen serious price increases, with major products up by 50 to 60 per cent. Richard Goddard, GSI MD, said an upturn in production could result in another worldwide stockpile. He said: "At the moment, everyone can buy stock with confidence. If the vendors step up production now we will have the same problems as before." Alan Stanley, Dane-Elec general manager, agreed it could cause a damaging surplus. Stanley said delivery time had been growing this quarter, with many products taking from 12 to 16 weeks to arrive from South Korea. He believed this hand to mouth activity was pushing up and stabilising prices. Distributors predicted the Christmas demand would soak up the increase without upsetting the market for now, but said it could hit by mid-1999. The production boost has been attributed to the vendors wanting to cash in on firmer DRAM prices and a shift to finer chip-feature sizes.®

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