High Memory Costs Could Hit Smartphone Makers' 2H Earnings
Dow Jones
Yesterday
0940 GMT - High memory costs could be reflected in smartphone makers' 2H earnings, HSBC analysts say in a research note. As smartphone makers procure most memory chips under contract rather than buying directly in the spot market, there is a delay in cost transmission, they say. While DRAM contract prices started to rise in 4Q last year, many smartphone makers still had lower-cost inventories, which delayed the impact on earnings, they note. The impact of higher procurement costs should become more visible in 2H as inventories turn, the analysts say. Meanwhile, consumer-electronics makers have less bargaining power as this round of memory-price increases is driven by surging artificial-intelligence demand while smartphone and PC demand remain weak, they add.
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