Tougher export curbs spark fears of chip price spike, disruption

Mobile memory chips made by chipmaker SK Hynix are seen in Seoul. (Reuters/File)
Updated 18 July 2019

Tougher export curbs spark fears of chip price spike, disruption

  • Japan has tightened curbs on exports of three chipmaking materials

SEOUL: Memory chip spot prices have risen for the first time this year, indicating grim warnings of “never seen before” spikes and a supply disruption could come to pass as a dispute between South Korea and Japan drags on.

The 15 percent spike in DRAM chip prices over a week — in a sector dogged by oversupply and weak demand for more than a year — comes after Japan tightened curbs on exports of some chipmaking materials to South Korea — home to the world’s top two memory chipmakers, Samsung and SK Hynix Inc.

To be fair, the price surge indicated by industry tracker DRAMeXchange refers to the spot market that accounts for less than a 10th of the memory chip landscape as most major tech firms source through mid- and long-term contracts.

Given this background, major customers such as iPhone maker Apple are yet to start stockpiling, but the price spike has started fueling fears that Japan’s curbs will soon impact supply, several industry sources said.

“If the ban continues, memory prices will skyrocket like never seen before as 75 percent of DRAM and 45 percent of NAND global output is at risk,” Mark Newman from Bernstein said, referring to South Korea’s dominance in the supply of those memory chips.

A person at a South Korean chipmaker said customers were “following the situations closely” but “taking a wait-and-see approach as demand remains weak.”

Samsung and SK Hynix declined to comment.

“We will need contingency plans if the impact materializes,” said a spokeswoman at Vaio, a Sony Corp. spinoff.

“Options include seeking alternative chip suppliers outside South Korea,” she said, adding business at the Japanese computer maker had not yet been hit.

Taiwan Semiconductor Manufacturing Co. Ltd, the world’s top contract chipmaker, warned that Japan’s export curb is the “biggest uncertainty” for the fourth quarter.

Japan has tightened curbs on exports of three chipmaking materials — fluorinated polyimides, used in smartphone displays; photoresists, used to transfer circuit patterns onto semiconductor wafers; and hydrogen fluoride, used as an etching gas when making chips.

South Korea sourced 94 percent of fluorinated polyimides, 92 percent of photoresists and about 44 percent of hydrogen fluoride from Japan in the first five months of this year, Korean industry data showed.

Seoul has said it is seeking to make its supply chain more independent and has been getting fresh offers from Russia and China to provide hydrogen fluoride.

In the NAND flash market, supply has also been hurt by an output halt at Japan’s Toshiba Memory last month due to a power outage.

A person at Toshiba Memory said the plant resumed operations in mid-July, but it will take time for shipments to recover fully.


UBS fined $51 million by Hong Kong regulator for overcharging clients

Updated 11 November 2019

UBS fined $51 million by Hong Kong regulator for overcharging clients

  • Hong Kong regulator’s investigation exposed ‘serious systemic internal control failures’ at the bank
  • In March, the Securities and Futures Commission banned UBS from leading initial public offerings in Hong Kong for a year

HONG KONG: Swiss bank UBS was fined HK$400 million ($51.09 million) by Hong Kong’s securities regulator for overcharging up to 5,000 clients for nearly a decade, the watchdog said on Monday.
The Hong Kong Securities and Futures Commission (SFC) said in a statement that an investigation found UBS had overcharged clients on ‘post-trade spread increases’ and charges in excess of standard disclosures and rates between 2008 and 2017.
THE SFC said the investigation exposed ‘serious systemic internal control failures’ at the bank. UBS had failed to disclose conflicts of interests and had overcharged some clients in ‘opaque’ trades, it said.
The overcharging affected 5000 Hong Kong managed client accounts in about 28,700 transactions, it said.
UBS has also agreed to repay the clients HK$200 million, the SFC said.
The regulator said the over-charging occurred in the bank’s wealth management division on bond and structured notes transactions.
UBS was found to have increased the spread charged after the execution of a trade without the clients’ knowledge, it said.
In the statement, the SFC said UBS was also found to have falsified some account statements which were issued to financial intermediaries who were authorized to trade for the clients to “conceal the overcharges.”
UBS said the issues were ‘self-reported’ to the SFC and the results found were against the bank’s standard practice.
“The relevant conduct predominantly relates to limit orders of certain debt securities and structured note transactions, which account for a very small percentage of the bank’s order processing system,” the bank said in a statement.
SFC chief executive Ashley Alder said while each “overcharge represented a fraction of each trade” the bank’s “misconduct involved decisions and a pervasive abuse of trust resulting in significant additional revenue for UBS to which it was not entitled.”
In March, the SFC banned UBS from leading initial public offerings in Hong Kong for a year after it found the bank, and some of its rivals, had failed to carry out sufficient due diligence on a number of deals.
UBS was fined HK$375 million while Morgan Stanley was fined HK$224 million, Merrill Lynch HK$128 million and Standard Chartered (StanChart) HK$59.7 million, all for failures when sponsoring, or leading, public market floats.