DigiTimes Causes Samsung To Lose $10 Billion Market Value

Reuters reports that an article published by DigiTimes caused a 6.2-percent slump in Samsung Electronics shares, eliminating $10 billion off the company's market value. This was the company’s biggest daily fall in nearly four years, closing at a 9-week low of 1.23 million won ($1,100).

Just recently DigiTimes said that Apple placed large mobile DRAM orders with "troubled" Elpida's 12-inch plant in Hiroshima, Japan, thus securing around half of the facilities' total chip production. Once the report went live and the shares began to tank, Samsung reportedly moved the announcement of its new 20-nm DRAM chips -- originally scheduled for Monday -- up to yesterday, May 17, to "quell fears with investors and shareholders."

Naturally Samsung denies the DigiTimes report, claiming that Apple will still use its chips going forward. “The report from Taiwan is exaggerated. Apple is always looking to diversify its part-sourcing channels. In flat screens and chips, Apple is sourcing parts from various clients that include Samsung, however, that doesn’t mean we are losing our edge as Apple’s top-tier client," a Samsung executive told The Korea Times.

Other chip suppliers also took a hit in stock, including SK hynix who saw shares closing at almost 9-percent lower at a 20-week low -- this was the company's biggest one-day drop in nine months. A representative refused to comment on whether Apple had reduced orders from the firm, but merely stated that "we are receiving more orders for mobile DRAM chips from our customers."

U.S.-based Micron Technology is reportedly in talks with Elpida to acquire the Japanese firm as it tries to restructure its business. Tough market conditions and global competition drove it into bankruptcy protection.

"A merged Micron-Elpida could pose a significant threat to South Korean memory chipmakers, and Elpida's huge order from Apple was the spark that triggered these worries," said Lim Dol-yi, an analyst at Solomon Investment & Securities.

Another analyst claims that Apple is maintaining its bargaining power by keeping Elpida up and running, thus preventing Samsung and hynx from dominating the chip market.

Kevin started taking PCs apart in the 90s when Quake was on the way and his PC lacked the required components. Since then, he’s loved all things PC-related and cool gadgets ranging from the New Nintendo 3DS to Android tablets. He is currently a contributor at Digital Trends, writing about everything from computers to how-to content on Windows and Macs to reviews of the latest laptops from HP, Dell, Lenovo, and more. 

  • Ha. What a pointless world we live in where an article can negatively affect a business.
  • killerclick
    That's funny, bitter competitors in one segment and symbionts in another. And fanboys emotionally invest themselves in corporations, fighting over why it's better to get raped by one rather than the other.

    Don't be consumers, be creators.
  • SmileyTPB1
    I agree, people have lost sight of "long term investing" and will now dump a company's stock just because there is a report that the forklift operator down at the loading dock says it hurts when he pees.
  • razor512
    Because of how secretive these companies are with what is going on with them, their market value becomes based largely on speculation, thus a major news source releasing a negative article can cause a lot of trouble.

    anything above the level of the retail and end user is often kept from the public.

    Even when it comes to food, wholesalers and other suppliers have a system set up where you need a special ID in order to see their prices, this is all to keep the consumers from seeing things like a $1.29 bottle of soda only costing the store 40 cents each when they order a case of 500 bottles, or chicken breast only being 24 cents a pound before the retail markup

    many suppliers want to keep their pricing secret from consumers, and they want to keep pricing secret from other businesses so dell or HP doesn't go emo when samsung gives apple a better deal on memory

    the end result of all of the secrecy is speculation having a huge influence (which some companies can use to their advantage, eg apple deleting forum post and refusing to fix bad imac displays a while back in order to hide the face that they messed up on something)
  • ta152h
    hotsacomanHa. What a pointless world we live in where an article can negatively affect a business.
    So, you're complaining that the dissemination of correct information is liability, because it can have an effect? What???? You'd prefer no one could say anything, or that no one was allowed to react to what they see? That's better?

    First of all, their business was not negatively affected, their stock price was. That has little to do with their running their business. If the report comes to nothing, the market will react to that. If it does, then it already has. If you hold the stock, and believe in the company, you lose nothing.

    The big losers are the people that bought call options. They just expired on a down day, and that blows. But, really, you know going in that options are speculative, so you can't really complain about it.

    Rather than complain, this is exactly how the market is supposed to work, and is what is good in it. If they were disseminating false information, that would kind of suck, but, even then the market corrects for that. If you buy a stock long term, you already know Apple is going to look for other supplies (they always do), and you know that you can't depend on Apple keeping Samsung profitable, because of the nature of their relationship. So, this is a buying opportunity. If you're a chicken, and don't believe in the company, or something like this shocks you into selling, you should get eaten up by the market, and taught a lesson, so you can come back wiser, and buy stocks you have more conviction with.
  • Plasmid
    hotsacomanHa. What a pointless world we live in where an article can negatively affect a business.
    Pointlessness is a inherent nature of life because of death. Well that's if you are an atheist like me.
  • alextheblue
    SmileyTPB1I agree, people have lost sight of "long term investing" and will now dump a company's stock just because there is a report that the forklift operator down at the loading dock says it hurts when he pees.Wait, wait, it's not supposed to hurt when you pee? DAMNIT!
  • willard
    Now would be a really good time to buy Samsung stock. The company is doing just fine, has the GS3 on the horizon (smashing pre-order records already), and this article has dropped the price of stock so you get more bang for your buck.

    I'm guessing their stock will recover rapidly in the coming weeks to months. If you're an investor, get in now.
  • maddy143ded
    that article was probably a plant from apple..
    maybe to get better negotiating terms, or maybe keep samsung on its toes.
    who knows, but we have seen it happen many times, these are just pressure tactics from apple.inc
    if apple was so desperate then instead of micron buying out elpida, apple should buy out elpida..
  • ben1680
    Hence the reasons why short term buy and sell stock market investor need to be taxed 95% of their profit. This will curb the speculation and highly inflated share price (due to market perception or rumor). The current stock market system is one of the biggest fraud approved by the government...