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DRAM Industry Likely To Face Oversupply in 2019 (digitimes.com)
While the global DRAM market still remains robust currently, the recent capacity ramps by Micron Technology and the planned kick-off of commercial production by China-based Fujian Jin Hua Integrated Circuit and Innotron Memory (previously known as Hefei ChangXin) could lead to oversupply for the memory in 2019, Taiwanese newspaper DigiTimes reported Thursday, citing industry sources. From the report: Samsung Electronics and SK Hynix would be forced to overhaul their current profit-oriented business strategy as both firms believe that the booming memory market, which has continued for 2-3 years, is likely to be over by the end of 2018, according to a Korea-based Digital Times report. Although Samsung and SK Hynix both stated, at their latest investors conferences, respectively, that they will continue to ramp up capacities for memory chips, the aggressive moves by rival companies have made the two companies hesitate, said the report.
Samsung has seen its share in the DRAM market continue to dive after hitting a high of 50.2% in the third quarter of 2016 as rivals including Micron have jacked up their revenues and profits. Notably, Micron has ramped up its operating margin to as high as 50% so far in 2018 compared to 20% at the end of 2016. Additionally, Samsung saw its share in the market drop to 44.4% in the first quarter of 2018, while Micron managed to ramp up its share to 23.1%, according to IHS Markit. The global DRAM market is expected to reach a peak of US$104 billion in 2018, before contracting by 1.8% and 2.6%, respectively, in 2019 and 2020, according to an industry estimate.
Samsung has seen its share in the DRAM market continue to dive after hitting a high of 50.2% in the third quarter of 2016 as rivals including Micron have jacked up their revenues and profits. Notably, Micron has ramped up its operating margin to as high as 50% so far in 2018 compared to 20% at the end of 2016. Additionally, Samsung saw its share in the market drop to 44.4% in the first quarter of 2018, while Micron managed to ramp up its share to 23.1%, according to IHS Markit. The global DRAM market is expected to reach a peak of US$104 billion in 2018, before contracting by 1.8% and 2.6%, respectively, in 2019 and 2020, according to an industry estimate.
Maybe an oversupply will bring the prices down a bit from being gawdawfully high.
Will that prevent them from colluding? DRAM prices have been insane for the past two years. I don't remember we've ever had such a situation in the world of RAM ever before: RAM became twice as expensive as it had been earlier.
aw man
you just gave me a sad
Maybe Apple will finally stop selling computers with only 4GB or 8GB RAM.
#DeleteFacebook
Many smartphones need a vast quantity of DRAM.
Laptop too. Computers too. Cars's electronic devices too.
Their CPUs are normally x64 and AARM64.
Dear Customers,
Even though we've been caught on fixed pricing, it will be cheaper in 2 years, we swear.
We could go back to normal pricing tomorrow, but why would we? So please, wait until we milk you for 2 additional years, and then we will go back to normal prices. Just trust us!
The memory cartel
This El Reg article gives a good overview of just how messy the development of this PRC production capacity has been. They of course stole a lot of tech, in particular from Micron through UMC, and have added lawfare to the mix, a dubious lawsuit claiming patent infringement, and what I would guess is a much less dubious anti-trust price fixing action.
No doubt they expected Hillary to be President by the time this capacity came on-line, they'd owned the Clintons since Bill was governor of Arkansas and needed a bailout when the political machine he joined got a bit too greedy in raiding a state pension fund. Instead they got Trump, who's upping tarriffs to cover $200 billion worth of Chinese imports within 45 days, with a promised $500 billion to follow if they don't change their tune. Going to get ugly....
This is where you praise the creators of the Electron framework. A copy of Chromium for the GUI, a copy of node.js for the backend, what's not to love?
Look for an article contradicting this article within a few days. Fujian Jin Hua Integrated Circuit and Innotron Memory may supply "DRAM", but that doesn't mean they'll supply competitive DRAM for leading edge applications in volume in 2019. It's more complicated than more suppliers == oversupply.
If DRAM were easy to make then there would be a lot of competitive suppliers and low margins instead of 3 suppliers making high margins.
This article may be correct. It's more likely incorrect (or a mixed bag of correct/incorrect).
Micron stock is up today, so markets aren't taking it too seriously.
Do tariffs have something to do with this? If they do, at what point does smuggling start happening? How would it work in modern times anyway? I mean, it's not like all these shipping companies are going to say, "Trump says it's 50% more" and just throw up their hands. Somebody is figuring this all out, even as we speak. Are bales of DRAMs going to float ashore like cocaine or what?
Back in 2013, they bought Elpida. Their combined market share before the acquisition was about 25%. After, it dwindled below 20%, and is only now coming back above 20%.
Likewise, Samsung's 50.2% quarter was an outlier. They've been holding pretty steadily around 45% since 2015.
In fact, the most striking this is how the big three (Samsung, SK Hynix (Hyundai Electronix), and Micron) have come to dominate, shrinking the market share of the bit players from over 10% in 2011 down below 5% today.
the prices have been ridiculous for several years now. Hoping to see DDR4 at $10 or less per GB.
I don't believe "oversupply" is the word to use here.
It's real hard to have too much of a commodity. If there is an "oversupply" of pork then people will eat pork instead of beef or chicken, therefore the "oversupply" goes away before it even happens. If there is an "oversupply" of cement then prices come down, people start to think they'd like a new driveway, cities build more roads, and the "oversupply" disappears.
With DRAM this just means that smartphones, computers, and TV sets, will have more DRAM for the same price or prices drop on the devices. There's an endless demand for more memory on consumer devices, I find it very difficult to believe that there will ever be a true "oversupply".
I am armed because I am free. I am free because I am armed.
Ain't nothing a good tariff won't fix. With any luck there'll be a bailout to go with it.
According to the Vice Glorious Leader, 73K Pennsylvanians got a pay raise or a bonus after the Republican Regime's tax cuts for the rich.
The other 6M Pennsylvanians got nothing. That's #MAGA
"overhaul their current profit-oriented business strategy" - didn't one of them just get an $8 billion fine for price fixing flash products? So yeah, that's one way to put it. With the ridiculous graphics card shortages, DDR4 prices, and SSD price spikes, they should find everyone at that company responsible, execute them publicly, and then restructure the company. As for this ridiculously fake, manufactured BS news story that I'm sure was released by them to cover up the fact that they under produced DRAM on purpose, don't believe one word of it. They purposely didn't build enough factories and that's not a problem that gets better in 6 months.
Its been a while since the computing industry was rocked by either a fire or a natural disaster taking a vital semiconductor fab offline for an extended period of time. Supply side diversity is good for pretty much everyone, except the suppliers.