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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.
Maybe Apple will finally stop selling computers with only 4GB or 8GB RAM.
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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.
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 tariffs are only on trade between the PRC and the US, and since Samsung and SK Hynix in Korea have over 80% of the DRAM market, Micron's 17% probably isn't that significant. (Figures from here.)
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".
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Ummm, no? I don't remember it (it would be a really big thing, enough to cost them the opportunity to build or upgrade a fab line), couldn't find it using Bing or Google.