Thursday, September 20th 2018

Samsung To Reduce DRAM Output Growth in Favor of Maintaining Prices, Says Bloomberg

In a bid to head off investor worries of a potential downturn, Samsung is looking to tighten their belts in regards to the manufacturing of DRAM. In particular, this move is preempted by the expectation of DRAM bit growth to be less than 20% year-over-year, with bit growth being the key measurement for gauging market demand based on the amount of memory produced. Considering the semiconductor industry is known for its up and down cycles, Samsung's preemptive move could stabilize or even drive up the cost of memory coming out of not just them but Micron and SK Hynix as well. This would help keep their profits rolling in, just in case a downturn in demand does take place, but it also means PC enthusiasts will have to deal with memory prices remaining roughly the same or possibly climb higher going forward.

Anthea Lai, an analyst for Bloomberg Intelligence, in Hong Kong made note that "If Samsung does cut its DRAM bit growth, it shows the company is happy with the current oligopoly market structure." Elaborating further, he said that "It prefers keeping supply tight and prices high, rather than taking market share and risking lower prices, therefore chances for DRAM prices to stay strong is higher."
Morgan Stanley analysts have also predicted a weakening outlook for the server DRAM market which, paired with stalling smartphone sales, shows why investors may be spooked. This is especially true when one considers the market has enjoyed a two-year surge with record profits. What may not be abundantly clear, however, is this reduction in manufacturing also means a possible reduction in R&D investment by Samsung and its rivals. All we can do for now is wait and see how things develop. Source: Bloomberg
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62 Comments on Samsung To Reduce DRAM Output Growth in Favor of Maintaining Prices, Says Bloomberg

#1
TheOne
When I bought my MB in 2015 it came with a free stick of Avexir 8GB DDR4 2133 memory, I miss those days.
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#2
Prima.Vera
Just another scambag tactic by a greed and callous corporation. Nothing new.
Already there are cheaper SSDs out there with the same performance as Samy's and also RAM too. So good luck with them trying to compete on the price level with the Chinese and Taiwanese companies.
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#3
Caring1
At least they aren't faking a natural disaster or plant fire .....
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#4
hat
Enthusiast
So, price fixing basically... only we know about it beforehand. There's got to be more to it than this though... would Samsung really cut down production and just let Micron and Hynix pick up the slack (sales)? That would only serve to damage Samsung while handing Micron and Hynix the work instead.
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#5
crazyeyesreaper
Chief Broken Rig
"hat said:
So, price fixing basically... only we know about it beforehand. There's got to be more to it than this though... would Samsung really cut down production and just let Micron and Hynix pick up the slack (sales)? That would only serve to damage Samsung while handing Micron and Hynix the work instead.
Its more likely no one will pick up the slack because prices will remain high and therefore profit margins.
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#6
hat
Enthusiast
"crazyeyesreaper said:
Its more likely no one will pick up the slack because prices will remain high and therefore profit margins.
Why not ramp up production if your "competitor" is cutting back in a market where there is always demand?
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#7
crazyeyesreaper
Chief Broken Rig
"hat said:
Why not ramp up production if your "competitor" is cutting back in a market where there is always demand?
Because market share isn't worthwhile if you your overall profits drop. This is why they were accused of price fixing to begin with. In this situation Samsung is content letting Micron and Hynix pick up the slack because if they do prices won't change as much because of just how huge samsung is as a supplier to so many.

Another example if AMD processors or graphics cards were faster than Intel / NVIDIA due to the situation and how much they can produce at TSMC etc they could never supply enough. In this case Micro / Hynix can reap the benefit of higher prices along with Samsung by doing absolutely nothing. Overall supply diminishes and everyone laughs on there way to the bank.
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#8
Frick
Fishfaced Nincompoop
"TheOne said:
When I bought my MB in 2015 it came with a free stick of Avexir 8GB DDR4 2133 memory, I miss those days.
Yeah.. The last time I bought memory I payed €24 for 8GB DDR3 1600. DDR4 prices is definitely holding back an upgrade for me.
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#9
Durvelle27
How can companies get away with stuff like this
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#10
xkm1948
"Durvelle27 said:
How can companies get away with stuff like this
Monopoly


Would be interesting once China enters the market. They don't seem to mind flooding the market with cheap stuff just to market share. Maybe by DDR5 things will improve.

http://www.eenewseurope.com/news/china-set-make-fifth-worlds-chips-2020-0

"Caring1 said:
At least they aren't faking a natural disaster or plant fire .....
Dont give them any ideas
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#11
Fouquin
It would be interesting if Nanya just steps out of the shadows with extremely low-cost options to give a kick to the industry, but they're such a small player anymore I doubt they can really make a change.
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#12
FordGT90Concept
"I go fast!1!11!1!"
DRAM cartel. Back in 2006, there were fines and prison sentences handed out. Regulators need to go full trust busting on them because they clearly haven't learned from their mistakes.
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#13
timta2
"FordGT90Concept said:
DRAM cartel. Back in 2006, there were fines and prison sentences handed out. Regulators need to go full trust busting on them because they clearly haven't learned from their mistakes.
The regulators are corrupt and colluding with the corporations and politicians, not just here in the US, but worldwide. The small slaps on the wrists, that they received in the past, were just an attempt to pacify the public and considered part of the cost of doing business for these companies. That's why they are still doing it and nobody is going to stop them. They don't even bother to hide the corruption anymore.
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#14
FordGT90Concept
"I go fast!1!11!1!"
They don't hide it because they will get prosecuted for lying to investors. Far less likely to get prosecuted for anti-trust.
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#15
AsRock
TPU addict
"Frick said:
Yeah.. The last time I bought memory I payed €24 for 8GB DDR3 1600. DDR4 prices is definitely holding back an upgrade for me.
And i remember paying north of $200 for corsair DDR2 ram and they were only 2x2GB sticks if my memory serves me right.

"hat said:
So, price fixing basically... only we know about it beforehand. There's got to be more to it than this though... would Samsung really cut down production and just let Micron and Hynix pick up the slack (sales)? That would only serve to damage Samsung while handing Micron and Hynix the work instead.
That be risky for them to do as there is nothing stopping Samsung ramping production back up.
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#16
Prima.Vera
"hat said:
So, price fixing basically... only we know about it beforehand. There's got to be more to it than this though... would Samsung really cut down production and just let Micron and Hynix pick up the slack (sales)? That would only serve to damage Samsung while handing Micron and Hynix the work instead.
Haha. You forgot about the DRAM Cartel of those 3?? :laugh::pimp:
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#17
R0H1T
Capitalism 101 :ohwell:

I was hoping to stock cheap DDR4 near the festive season, but I guess that won't happen, probably ever!
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#18
Frick
Fishfaced Nincompoop
"AsRock said:
And i remember paying north of $200 for corsair DDR2 ram and they were only 2x2GB sticks if my memory serves me right.
Progress is a wonderful thing.
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#19
Liquid Cool
I didn't want AsRock to feel too bad....:). I've been a customer of Newegg since the very beginning...every time I go back through my 90 pages worth of invoices...I cringe.



About 50% of my new build....:),

Liquid Cool
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#20
notb
"FordGT90Concept said:
DRAM cartel. Back in 2006, there were fines and prison sentences handed out. Regulators need to go full trust busting on them because they clearly haven't learned from their mistakes.
You can prosecute a group of companies for price fixing.
You can't prosecute a company for setting their own price.

What Samsung does is 100% legal and actually fairly normal. Just like with Nvidia and RTX, they've decided to sell less items for a higher price. I don't understand why people here are reacting so negatively.
"hat said:
Why not ramp up production if your "competitor" is cutting back in a market where there is always demand?
Because semiconductor fabs and staff are expensive and there might be a better way of using them.

As for Samsung: I don't know the reason why they limit their DRAM output (other than just a possible profit optimization), but it's no secret that they've been planning to expand in PC segment for a while.
At this point they're mostly making RAM and LCD panels (and a tiny amount of notebooks), but we should expect more complex products in next few years (an alternative to Apple's lineup).
Also, it's almost official that they're getting back into large CMOS sensor manufacturing, which they left around early 2015.
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#21
beautyless
To make Ram usage lower, I wish twitter and facebook web have paging option in their feeds, not only in their lite mobile mode.
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#22
RejZoR
So, now they are just straight up openly admitting they're price fixing DRAM... :/
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#23
stimpy88
So, they admit to fixing prices artificially high. I guess we need a chemical leak, fire, virus infection, or power cut to increase profits.
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#24
laszlo
"RejZoR said:
So, now they are just straight up openly admitting they're price fixing DRAM... :/
i see it differently... they won't throw in market all production only the needed % to keep supply at same level...a smart move to avoid all price fixing accusations as nobody can't be forced to sell all inventory

as opposite i see nv who want to sell all previous gen stock without lowering prices...

at the end is how free market&capitalism run..... moar $ for them less for us...
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#25
Parn
So basically when I picked up Corsair 2x16GB DDR4 2666 from Amazon for £200 (believe it was a labelling error) last November, that was like a last sight of an extinct animal. Unless the regulators do something or some new players join the market and stir things up, the DRAM price will never come down again.
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