QUOTE OF THE DAY
“People who were very, very negative on the eurozone were very, very wrong on that. These people have now changed their mindsets.”
Sebastien Galy, a senior currency strategist at Societe Generale SA in New York, about the renewed interest by investors in the euro currency Article, 1D
Fire at chip factory sparks price jump
SEOUL, South Korea - Prices for memory chips used in smartphones and personal computers surged 19 percent this week, the most in three years, as SK Hynix suspended operations in China after a factory fire.
The blaze occurred Wednesday during the installation of equipment at a factory in Wuxi, China, that manufactures dynamic random-access memory chips for SK Hynix, the world’s second-largest chip maker. The fire burned for about 90 minutes, the Icheon, South Korea-based company said. One person suffered minor injuries.
The price of benchmark DDR3 2-gigabit DRAM jumped 30 cents, the biggest increase since September 2010, to $1.90 Thursday, according to DRAMeXchange, Asia’s largest market for the components. The surge underscores growing concerns that makers of mobile devices and PCs will suffer rising component costs due to potential supply shortages, since SK Hynix makes almost one-third of the world’s DRAM chips.
“It will take at least half a year before SK Hynix’s damaged clean room is fully rebuilt,” market research firm TrendForce said in a report. “Such an event is likely to cause the price uptrend of PC DRAM and mobile DRAM to continue throughout” the fourth quarter.
SK Hynix, which makes half of its chips in Wuxi, held a 30 percent share of the global DRAM market in the second quarter, following Samsung Electronics Co.’s 32.7 percent, Trend-Force said on Aug. 8.
If the Wuxi factory’s production is halted for more than a week, substantial shortages could lead to higher prices, benefiting all memory-chip manufacturers, Sanford C. Bernstein & Co. said in a report Friday.
SK Hynix’s customers include Apple, Samsung, Lenovo Group, Dell and Sony, according to data compiled by Bloomberg.
“We are still investigating the extent of damage,” SK Hynix said in an emailed statement. “Currently, there is no material damage to the fab equipment in the clean room, thus we expect to resume operations in a short time period so that overall production and supply volume would not be materially affected.”American Tower to acquire Global Tower
American Tower Corp., the biggest operator of cellular towers in the United States, has agreed to acquire the parent company of rival Global Tower Partners for about $3.3 billion, giving it thousands of additional wireless sites as the appetite for next-generation services grows.
American Tower is buying MIP Tower Holdings LLC, a closely held real estate investment trust that owns Global Tower Partners and related companies, according to a statement Friday. The deal brings American Tower about 5,400 U.S. towers and the management rights to more than 9,000 additional sites. Including debt, the purchase price is about $4.8 billion.
The tower industry is consolidating, with fewer companies controlling bigger swaths of equipment amid booming demand for mobile communications and the gear needed to transmit signals. Low interest rates also may be spurring American Tower to make deals, said James Moorman, an analyst at S&P Capital IQ Inc.
“It also gives them more exposure to the next leg of network expansion, which is starting more quickly than expected due to capacity needs,” Moorman said.
This is the second major acquisition in the past two months by American Tower. Last month the Boston-based company agreed to buy almost 4,500 wireless sites from NII Holdings Inc. in Brazil and Mexico for $811 million.
Including debt, Friday’s acquisition follows two blockbuster deals earlier this week: Verizon Communications Inc. agreed to purchase Vodafone Group Plc’s stake in Verizon Wireless for $130 billion, and Microsoft Corp. announced plans to buy Nokia Oyj’s mobile-phone business for $7.2 billion.
- Bloomberg News
JPMorgan to quit student-loan business
JPMorgan Chase will cease making student loans next month, according to a memo obtained Thursday by The Washington Post, a move that will leave the already shrinking private loan market in the hands of even fewer firms.
The decision follows a period of turmoil in education finance sparked by the overhaul of the federal student-loan program in 2010. The government captured a majority of the market by choosing to lend directly to students, leaving a limited role for private lenders.
Since then, JPMorgan’s once-thriving student-lending business has declined from $6.9 billion worth of loans made in 2008 to $200 million originated last year, the company has stated.
JPMorgan began to retreat from the business in July 2012 when it stopped extending student loans to customers without an existing relationship with the bank.
“We no longer see any meaningful growth in the private student-lending market,” said Trish Wexler, a spokesman for JPMorgan. “We’ve just decided to invest our resources in our other businesses like auto lending, where we do see a lot of potential.”
In the memo, which JPMorgan sent Thursday to 2,000 colleges, the company said it would stop accepting new loan applications after Oct. 12. Schools must schedule all final loan disbursements before March 15, 2014.
“This is a troubling trend for students and taxpayers, meaning even less competition in the marketplace,” said Richard Hunt, chief executive of the Consumer Bankers Association, a trade group.
As it stands, Sallie Mae, Wells Fargo and Discover Financial Services dominate the market for private student loans, according to data from the Consumer Financial Protection Bureau.
Private loans account for $150 billion of the $1 trillion in outstanding education debt and have come under increased scrutiny.
Business, Pages 32 on 09/07/2013