Hynix gets deathbed extension; Powerchip reaches for lifeline

Hynix got banks to rollover some financing due in 2009 and got a cash infusion from Korea. Powerchip is asking Taiwan to bail them out, too. DRAM contract prices for 2H December collapsed further:

DRAM Contract Price (2H Dec.)

 

Mode	Item	High	Low	Average	High Change	Low Change	History
	DDR2 2GB SO-DIMM 667MHz	17.00	15.00	16.00	(-10.53%)	(-6.25%)
	DDR2 1GB SO-DIMM 667MHz	8.50	7.50	8.00	(-10.53%)	(-6.25%)
	DDR2 512MB SO-DIMM 667MHz	6.25	5.50	6.00	(-7.41%)	(-8.33%)
	DDR2 1Gb 128Mx8 667MHz	0.88	0.75	0.81	(-12.00%)	(-7.41%)
	DDR2 512Mb 64Mx8 667MHz	0.41	0.31	0.38	(-12.77%)	(-18.42%)

 

(courtesy www.dramexchange.com)

Spot prices have started to back off as volumes are dry heading into the holidays.

Though output cuts from Hynix, Powerchip, Micron and the rest of the motley memory crew will help to alleviate pressure on prices, the really meaningful shutdowns don't happen when insolvent players are kept alive through government intervention. It stifles recovery and ultimately hurts all competitors. Hopefully Hynix follows through on its proposed output cuts after receiving their refinancing… but you never know what happens when bad businesses get new fistfuls of cash.