Battered Asian memory chip makers will get some respite from oversupply in the long term after German chipmaker Qimonda filed for insolvency but the industry's recovery depends on a pick-up in demand. Makers of dynamic random access memory (DRAM) chips, used mainly in personal computers and increasingly in mobile devices and game consoles, are fighting a long supply glut and falling demand in a global downturn that is causing them to lose money on each chip they make.

Although the direct impact on chip supply would be limited, Qimonda's troubles should give investors a reason to focus on leading players, such as Samsung Electronics, Hynix Semiconductor and Elpida Memory. “The Qimonda news is like rain after a long drought,” said Jay Kim, an analyst at Hyundai Securities in Seoul. Qimonda, ranked as the world's fifth-largest memory chip maker in the second quarter of 2008, filed for insolvency on Friday as a result of huge industry price drops and a credit squeeze.