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Will memory chips make a comeback?Agency denial

Relâche sur : 6 mai 2023

As the market downturn continues and terminal demand remains weak, Samsung, SK Hynix and Micron have taken production reduction measures to control the decline of memory prices by quantity pricing.
Recently, the market channel received a notice from Micron that DRAM and NAND Flash will not accept inquiries below the current price from May.
Not all memory, but low-cost particles, TrendForce says. Inventory is still high part, the decline cannot avoid.

 

The channel operator said it had been informed by Micron's consumer components department that DRAM and NAND Flash would not accept lower price inquiries from May, indicating that Micron would not follow up with price cuts.
Samsung has also told its distributors that it will no longer offer products at below - quote prices, and the original manufacturer appears to be making a bottom line.
This strategy is targeted at spot prices, but the stabilization strategy has the opportunity to gradually expand into the contract market.

 

TrendForce refers to the contract market. Although DRAM suppliers actively cut production, the output bit volume did not achieve effective convergence in the second quarter, and the contract price fell more than 15% in a quarter than expected. It is also observed that there is a strong wait-and-see atmosphere at the OEMs side.
As demand outlook is not good, the buyer is still more passive.

 

The spot market was slightly higher this week on Micron's Spectek sub-brand, especially as the lower price granules indicated no more price cuts.
The spot market is stagnant, similar to the wait-and-see mentality of the contract market.
Suppliers have already entered a period of deep losses and it is necessary to keep cutting production to avoid another price collapse.
DDR4 prices are still falling due to high inventory and weak demand. DDR5 supply by PMIC compatibility event crowding out limit contraction, spot prices rose trend.

 

 

Is the worst over for memory chips?

 

The world's top memory chip makers, battling the worst industry downturn in more than a decade, said the worst may soon be over as customers return and production cuts and investment help tackle a supply glut, the Wall Street Journal reported.

 

Samsung Electronics Co said on Thursday it expects demand for memory chips to gradually recover in the second half of the year after a long decline, after reporting a US $3.4 billion operating loss at its semiconductor unit in the first quarter.
Samsung, the biggest maker of memory chips, expressed optimism that customers would start buying again as its inventory was now depleted and manufacturers were preparing to launch new smartphones and PCS later this year.

 

A day earlier, SK Hynix, the world's second-largest maker of memory chips used in everyday electronics and data servers, expressed a similar view of a second-half recovery.
Inventory held by customers fell in the first three months of the year, creating room for them to start buying again, while the impact of suppliers' production cuts will also start to be felt, the company said.

 

"The memory market is still in a difficult state and seems to be bottoming out," Kim Woo-hyun, SK Hynix's chief financial officer, said on Wednesday.
"We expect improvement in the first half," he added on the company's earnings call.

 

The semiconductor industry as a whole has been grappling with its worst downturn in years, after a pandemic-induced technology buying spree that boosted sales.
Since last year, the global economic slowdown, inflation and geopolitical tensions have prompted companies and consumers to sharply curtail spending on electronics, driving demand for memory chips.

 

Prices of DRAM and NAND flash memory, the two main types of memory chips, peaked during the Covid-19 pandemic, driven by strong demand for tech products.
Prices began falling sharply in the second half of last year, and the downturn has continued until 2023 due to oversupply.
DRAM memory enables devices to multitask, while NAND flash provides on-device storage.

 

Last year, memory makers including SK Hynix Inc, Micron Technology Inc, Western Digital Corp and Tokyo-based Kaixia Holdings LTD announced plans to scale back production or reduce investment in expanding capacity in an effort to control supply and defend profitability.
Earlier this month, Samsung said it was cutting memory chip production by an unspecified "meaningful level," joining its peers.

 

U.s.-based memory chip maker Micron Technology Inc last month cut its 2023 demand forecast and said it was struggling with losses from high inventories in the quarter ended March 2.
Losses are expected to continue to shrink in coming quarters, Micron said.

 

Micron gave a different outlook for its business lines, saying it expects revenue from its data center memory business to have bottomed out.
The reopening of China is also expected to help drive up demand for memory, the company said.

 

"Customer inventories are getting better and we expect the industry's supply and demand balance to gradually improve," Micron Chief Executive Sanjay Mehrotra said at the time.

 

Taiwan-based market researcher TrendForce expects prices of DRAM and NAND flash memory to continue to fall on a quarterly basis through the second half of this year, but at a slower pace than in the first half.

 

Average contract prices for DRAM and NAND flash are expected to decline 7 percent and 1 percent, respectively, in the third quarter, and 3 percent and 7 percent, respectively, in the fourth quarter, according to TrendForce.
By contrast, both types of memory are expected to show double-digit quarter-on-quarter price declines in the first and second quarters, according to TrendForce.

 

Daniel Araujo, vice president of Samsung's mobile business, said on Thursday he expected to see signs of a global economic recovery and slowing inflation in the second half of the year, predicting growth in the sluggish smartphone market as people spend more again.
Developments in artificial intelligence and data-driven computing are also continuing to drive demand for more advanced forms of memory, said Kim Jae-june, executive vice president of Samsung's memory business.

 

Moves to reduce the supply of memory are also expected to help the industry.
Mr. Kim says Samsung's memory inventory has fallen since the production cuts began.
Correcting the demand imbalance will help Samsung's profitability.

 

The beleaguered sector breathed a sigh of relief as the two South Korean companies recorded huge losses in the first three months of the year.
On Thursday, Samsung said its company-wide net profit fell about 86 percent in the January-March quarter from a year earlier to about 1.57 trillion won, or $1.17 billion.
Samsung's semiconductor division reported an operating loss of Won4.58tn in the first quarter.
That compares with 8.45 trillion won in operating profit in the same period last year.

 

SK Hynix on Wednesday reported a first-quarter net loss of about 2.59tn won.
Last month, Micron reported a net loss of $2.31 billion for the latest quarter ended March 2.