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
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."
62 Comments on Samsung To Reduce DRAM Output Growth in Favor of Maintaining Prices, Says Bloomberg
That's the only thing I'm wondering about, not the effect on prices themselves - That's just a given.
This move by samsung is a gamble. If other DRAM makers all think like samsung does, then all is good. But if any of them get the bright idea to screw over samsung hard with a flood of dram supply at inflated prices, samsung will have a bad time indeed.
Your AMD/nvidia comparison is flawed because in that case, you have the makers tied to TSMC, which places a natural limit on supply. DRAM makers have applied entirely artifical limits on production right now, there is nothing to prevent these companies from slightly ramping up and stealing that extra profit right out from under samsung. By doing so, they woul still get those extra profits, but also deny samsung profit in the process.
In capitalism you dont let your competitor get an easy break. AMD did that with polaris and pascal, and it ended up with nvidia making a mint in extra profit, which is gonna bite AMD hard over the next few years.