Uncertain Future
SK Hynix is plagued by a negative outlook from Credit Suisse (CS), another major investment bank in Europe, again after “USB shock.” As CS released a report that SK Hynix is highly likely to fail in the acquisition of Toshiba’s memory chip business, foreign investors and institutions dumped stocks of SK Hynix which led to the decrease in its prices by more than 5 percent.
According to the Korea Exchange (KRX) on Feb. 24, the share price of SK Hynix closed at 47,500 won, down 5.38 percent. After global investment bank UBS Securities downgraded its investment opinion on SK Hynix, the stock price of SK Hynix plunged by 5.12 percent on the 10th. However, the price, which was recovering, showed another slide below the 50,000-won level.
The big fall in SK Hynix’s stock prices was triggered by the report of another global investment bank. Previously, CS announced that SK Hynix will not be able to acquire Toshiba’s semiconductor business division. The company said, “SK Hynix can issue bonds and has enough cash to buy the business. However, Toshiba is unlikely to sell the division to its competitor.” Its report made foreign investors and institutions dump SK Hynix’s stocks. On the 24th alone, foreign investors sold 1.13 million shares of SK Hynix, while foreign institutions sold 1.46 million shares. The net sales by foreign investors on this day stood at 54.4 billion won (US$48.1 million), which is about half of the total net sales by foreigners. Moreover, even institutions, which were unaffected by the report of USB, also sold the shares.
An unstable outlook on the semiconductor industry also has an adverse effect on SK Hynix. Lee Jong-woo, head of the research center at IBK Investment & Securities, said, “Anxiety about the whole semiconductor industry is eventually reflected in the reports released by foreign securities firms on SK Hynix. Supply excess, which is an unfavorable factor, is highly likely to exert strong downward pressure on stock prices of semiconductor companies, including SK Hynix, in the future. On the other hand, some say that they are over concerned. Kim Kyung-min, analyst at Daishin Securities, said, “The key issues of the recent controversy over the high point of the semiconductor industry are due to the trauma of new DRAM line expansion in the past and the recent slowdown in spot price increases, but these are over interpretation. In particular, Daishin Securities said that a boom in the semiconductor industry has continued as the supply of DRAM is limited after the conversion of fine process slowed down to 2 to 4 nanometers a year.
Meanwhile, Toshiba held a meeting of the board of directors and confirmed the procedure of re-bidding on the sale of its semiconductor business stakes, including the management rights, on the same day. According to The Nikkei, a Japanese newspaper formally known as The Nihon Keizai Shinbun, Toshiba has decided to increase the stake sales from 20 percent to more than 50 percent, including the management rights, and the total amount of the sale will reach 1 trillion yen (US$8.91 billion or 10.32 trillion won). The Nikkei also said that not only U.S.’ Western Digital and Taiwan’s Foxconn, which participated in the bidding for the minority shares purchase earlier this month, but also Apple and Microsoft are interested in buying the stake of management rights. SK Hynix Vice Chairman Park Sung-wook also showed his will to acquire the management rights of Toshiba’s semiconductor business on the 23rd, saying, “We will consider it when we get the offer.”